Blockbuster Offers over $1 billion for Circuit CityBy Reuters - | Posted 2008-04-14 Email Print
Blockbuster looks to ramp up its brick and mortar presence with a purchase of electronics retailer Circuit City.
NEW YORK/LOS ANGELES (Reuters) - Blockbuster Inc (BBI.N: Quote, Profile, Research) said on Monday it has offered up to $1.3 billion for electronics retailer Circuit City Stores Inc (CC.N: Quote, Profile, Research), in the movie rental chain's most aggressive step yet to recast itself as an entertainment hub.
The offer of $6 to $8 per share represents a premium of up to 105 percent on Circuit City's shares' closing price of $3.90 on Friday. The ailing retailer's stock traded above $19 within the last year.
Blockbuster said it made the offer in a February 17 letter to Circuit City Chief Executive Philip Schoonover, but decided to go public with the offer after Circuit City did not provide access to its books.
Blockbuster Chief Executive and Chairman Jim Keyes, a former CEO of 7-Eleven, was hired last year with a mandate to turn around the company. Keyes has shifted Blockbuster's emphasis from purely DVD rental markets, encapsulating both traditional and online rentals, to in-store sales of DVDs and other media such as video games.
He said the "new" Blockbuster would be "the most convenient source for media entertainment".
Blockbuster, which has 7,800 stores worldwide and a market capitalization about $80 million below Circuit City's $656.6 million, said it expects a profit of $30 million in the quarter that ended April 6.
Since taking the helm last July, Keyes has touted the long-term potential in the chain's brick-and-mortar stores and has pulled back on the company's aggressive and costly rivalry with Netflix Inc (NFLX.O: Quote, Profile, Research) for the online DVD rental market.