NEW YORK (CNNfn) - Viacom Inc. said Tuesday it agreed to sell Blockbuster Music, part of its Blockbuster Entertainment Group, to Wherehouse Entertainment Inc. for $115 million cash.
The sale is part of the media giant's overall plan to turn around its Blockbuster unit, which is expected to be spun off as early as next year.
The deal will allow Blockbuster "to focus on what it does best while at the same time further reducing Viacom's debt," Viacom Chairman and Chief Executive Sumner M. Redstone said.
The transaction includes 378 Blockbuster Music retail stores across the United States, which generated $590 million revenue in 1997. That translated to $1.9 million in cash flow (defined as earnings before interest, taxes, depreciation and amortization), excluding unallocated overhead and the effect of a charge taken last year.
Torrance, Calif.-based Wherehouse is owned by investment firm Cerberus Partners and emerged from Chapter 11 bankruptcy protection in 1997. For the latest fiscal year, ended Jan. 31, net income totaled $7.7 million on revenue of $327 million.
The transaction is expected to close in the fourth quarter.