B’buster ups Spelling stake

Blockbuster Entertainment has acquired another 10% of Spelling Entertainment.

The Ft. Lauderdale-based video and music retailer purchased 4.9 million shares of Spelling in a private transaction in exchange for Blockbuster shares, which were valued at the time of the transaction at $ 19.56.

The move bumps Blockbuster’s position to 63.5% from 53.8%

The deal was outlined in a filing with the Securities & Exchange Commission, but according to sources, it did not involve Spelling insiders.

The average price per share for Spelling was around $ 6.38, an 8.6% premium to the $ 5.85 at the market close on Tuesday. Neither company was available for comment.

“Obviously, they think it’s a good investment,” said Paul Marsh, an analyst with NatWest Securities, adding, “it might kindle speculation that Blockbuster wants the rest of the company.”

Marsh believes that with Blockbuster’s deep pockets and marketing clout, Spelling could hit $ 10 a share in the next 12 months. Already, the company has hinted it will heavily promote Spelling’s homevideo titles in its 3,400 stores.

Last March, in a surprise move, Blockbuster bought its original stake in the TV programmer, purchasing 48.2% of the company from Carl Lindner’s American Financial Corp. for an estimated $ 141.3 million. Since then, Blockbuster’s chairman, H. Wayne Huizenga, and prexy, Steve Berrard, have assumed the titles of chair and prez at Spelling.