Video rental giant Blockbuster has officially withdrawn its offer to acquire struggling electronics retailer Circuit City.
“Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster’s shareholders to proceed with an acquisition of Circuit City,” said Blockbuster CEO Jim Keyes, in a statement.
Blockbuster made its offer to acquire Circuit City back in February (only telling anyone about it in April) for between $6 to $8 per share in a deal that could have been worth up to $1.3 billion, but complained Circuit City wouldn’t open its books. At the time, industry watchers were wondering what Blockbuster was thinking: the company had only recently managed to show any growth in its video rental business in the face of competition from firms like Netflix, and Circuit City was facing its own shareholder revolt from Wattles Capital Management, which was aggressively promoting its own agency to return the company profitability and maybe take back the number on electronics retailing slot from Best Buy.
Blockbuster says it continues to believe a retail offering combining both media and consumer electronics is a viable business model, and it will continue to persue the idea through other channels.
