Blockbuster Offers over $1 billion for Circuit City
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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.
Desktops & Notebooks 
