Wayne Huizenga Part 4: The Deal of Wayne’s Life

Wayne Huizenga’s fascination with perception on Wall Street continued to fuel his desire to build Blockbuster into a diversified entertainment company. According to his biography, in June 1993, he met with advisors from Wall Street to discuss expanding into entertainment. The meeting resulted in a list of three potential partners: Viacom, Paramount, and Polygram Inc.

Over lunch, Wayne pitched Viacom’s Sumner Redstone on merging, but Redstone was busy trying to acquire Paramount. Viacom’s acquisition of Paramount meant that two targets on Wayne’s list would become one. Polygram was owned by Philips Electronics, which was restructuring and couldn’t entertain any deals.

Viacom announced its deal for Paramount, kicking off a bidding war between Redstone and QVC’s Barry Diller that gave Wayne an opportunity. As the price got higher, Redstone needed a partner. Wayne agreed to buy $600 million worth of preferred Viacom stock and receive a 5% dividend. Wayne did a stock offering at $30 per share to raise $424 million of the $600 million needed.

Diller bid higher, forcing Redstone to rework his proposal. Redstone needed someone willing to buy $1.2 billion worth of Viacom stock so he could use that cash to offer Paramount shareholders more cash in his cash-and-stock bid. Wayne agreed. He would buy $1.8 billion worth of Viacom stock, but with one condition: regardless of the outcome of the Paramount deal, Blockbuster and Paramount must merge.

The deal included a collar provision called a variable common right. If, on the first anniversary of the merger, Viacom shares were too low, Blockbuster shareholders would receive additional Viacom shares.

A lot of drama happened before the September breakup deadline. Wayne and Sumner’s relationship deteriorated. But the $8.4 billion deal was approved by Blockbuster shareholders and closed.

Wayne quit and owned a stake in Viacom worth $600 million. It was a bittersweet ending, but Wayne kept going. He didn’t need more money, but making money is still a challenge he enjoys. He summarized his thinking about this with this line: “Why do you climb the mountain? Because it’s there.”

In 1995, he and his friends invested $27 million for 6 million shares and warrants for another 12 million shares in Republic Waste Industries. Wayne personally invested another $13 million, and banks completed a private placement for $70 million. The stock went from $4 to $26 in months because of the “Huizenga effect.” Wayne was off to the races again with a new company and richly valued stock he could use to build a diversified services company!

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