Blockbuster Offers to Buy Circuit City

By Geoff Duncan April 14, 2008

Blockbuster Offers to Buy Circuit City

Struggling video rental company Blockbuster has disclosed that it made an unsolicited offer to buy struggling technology retailer Circuit City back in February, offering to pay $6 to $8 per share in a transaction worth up to $1.3 billion. According to Blockbuster chief james Keyes, the combined companies could create a retail powerhouse built on personal electronics and digital media, but Circuit City has failed to perform “due diligence” to enable Blockbuster to make a more definitive offer. Circuit City, however, says Blockbuster has been unable to assure Circuit City it could even finance the buy-out.

So what happens now? Blockbuster is taking its proposal directly to Circuit City’s investors, hoping to acquire enough support to take over the company.

According to Blockbuster, it has been talking with Circuit City executives for months regarding an acquisition, and put the idea in writing on February 17, asking to take a look at Circuit City’s financial records to make a more definitive offer and requesting a response by February 21. According to Blockbuster, Circuit City has failed to respond or let it looks at its books. Circuit City says it has disclosed “certain information” to Blockbuster, but is unwilling to offer more information until Blockbuster explains how it plans to finance a deal. Blockbuster has only said it would fund the takeover with loads and by issuing additional stock to current shareholders.

Industry watchers are questioning the wisdom of Blockbuster’s offer: the company has only recently been able to increase the size of its core video rental business in the face of tough competition from digital downloads and rent-by-mail services like Netflix. Circuit City, which used to be the top U.S. electronics retailer until losing the crown to Best Buy in the 1990s, managed to turn a small profit last quarter after aggressive cost-cutting, but has seen its stock price plummet over the last year and is facing a possible revolt from activist shareholder Wattles Capital Management which is looking to oust CEO Philip Schoonover (along with the company’s board) and institute its own plans to increase profitability.

Editors' Recommendations

Former Digital Trends Contributor

Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…

Audio / Video

How to figure out what size TV you should buy

Samsung The Terrace outdoor TV.

Buying a brand-new TV can be one of the most exciting purchases you’ve ever made, or an all-out nightmare. If you’re leaning toward the latter, we know what it feels like to be bogged down by the many ins and outs of modern TV ownership. You may not even know how big of a TV you should be buying in the first place. But rest assured, you’re not the only person who’s ever had this trouble, and we’re here to help.

Whether this is your first new TV in a long time, or you want to know if you can swap your 65-inch for a 75-inch screen, we’ve put together this guide to teach you everything you need to know about TV sizes, viewing distance, and other big-screen considerations.
How to calculate TV size for your room

Audio / Video

JBL earbuds sale: Save on these cheap AirPods alternatives

JBL Tune Flex earbuds in black.

If you're on the hunt for true wireless earbuds deals but Apple's AirPods are way too expensive for you -- even with the discounts from AirPods deals -- Best Buy is selling two affordable options by JBL, which is one of the most trusted names in the audio industry. The JBL Vibe Buds, originally priced at $50, are down to an even cheaper $40 for savings of $10, while the JBL Tune Flex, with a sticker price of $100, are on sale for only $70 for savings of $30. If you decide to take advantage of either of these offers, you're going to have to be quick with your purchase because there's no telling when their prices will go back to normal.
JBL Vibe Buds -- $40, was $50

JBL Tune Flex -- $70, was $100

Audio / Video

Save $120 with this Klipsch bookshelf speaker deal

The Klipsch Reference Premiere 500M II Speakers on a white background.

If you're thinking about getting new speakers for your living room, here's an offer that you should definitely consider -- a pair of the Klipsch Reference Premiere 500M II Speaker for only $379 from Best Buy, following a $120 discount on the bundle's original price of $499. We're not sure how much time is remaining before this offer expires though, so if you've already got an eye on the savings, you're going to have to complete your purchase for these bookshelf speakers as soon as you can.

Why you should buy the Klipsch Reference Premiere 500M II Speaker
Klipsch is one of the best speaker brands because of its focus on elevating the experience when you're watching movies and concerts from the comfort of your own couch. The same philosophy applies to the third-generation Klipsch Reference Premiere 500M II Speaker, which promises crisp and clear sound with the brand's Tractrix horn technology. The speaker also features 5.25-inch cerametallic woofers that minimize distortion and maximize efficiency to deliver the power and detail that you need to fully enjoy your music and streaming shows.