In what was termed the first step in expansion plans, Wherehouse Entertainment yesterday acquired the five-store, Colorado-based Rocky Mountain Records and Tapes. Terms of the deal were not disclosed.

The Torrance-based Wherehouse now has 315 stores in California, Arizona, Washington, Oregon, Nevada and Colorado, making it the largest entertainment software dealer in the Western states.

Five stores

Rocky Mountain Records and Tapes has two stores in Denver, two in Boulder and one in Fort Collins. Two of the Rocky Mountain stores are free-standing, with the other three based in malls. Before yesterday’s acquisition, Wherehouse had one Colorado store in a mall outside Denver.

Name retention

Wherehouse plans to retain the 20-year-old Rocky Mountain name and all of the 50 regular chain employees. Wherehouse has already added sell-through video and video games to the Rocky Mountain product mix, according to Bruce Jesse, Wherehouse VP of marketing and sales promotions, and will decide whether to add other product lines–with video rental a strong contender at the Rock Mountain free-standing stores–after the holiday season.

Competitors noted

Sound Warehouse and Musicland are among the market’s strong competitors, each with between 15-20 stores in the state.

Scott Young, chairman/CEO of Wherehouse, said the acquisition “is an important step in the development of the Wherehouse strategic plan,” which calls for continued expansion through acquisition and new store openings.

The company is co-owned by management and Merrill Lynch Capital Partners, the result of a leveraged buyout completed last June (Daily Variety, June 12).

The deal was valued at $ 275 million.

“We are currently looking for and evaluating other possible opportunities, not only in Colorado, but in other markets as well,” Young added.

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