Circuit City now open for new strategic options
Blockbuster Inc. has offered to acquire Circuit City Stores, Inc. for at least $6.00 per share in cash, subject to due diligence. The offer was made on February 17th.
Circuit City has apparently failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal. Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company.
Blockbuster noted the combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices. The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value.
It is quite an interesting thought that the movie rental company would be extending to also sell electronics. At some point in the next 5-10 years there will be no need for Blockbuster stores as movies will be downloaded and not rented via a disk. It seems to me that Blockbuster tries to stay a brick and mortar business also in a digital movie rental future.
More details in this Blockbuster press-release.