Blockbuster Makes $1 Billion Bid for Circuit City

Blockbuster Makes $1 Billion Bid for Circuit City

April 14 (Bloomberg) -- Blockbuster Inc., the world's largest movie-rental chain, made an unsolicited bid for Circuit City Stores Inc., the second-largest U.S. electronics retailer, worth at least $1 billion.

Blockbuster said today that it wrote to Circuit City Chief Executive Officer Philip Schoonover offering at least $6 a share, subject to due diligence. Blockbuster said it's making details of the bid public after Circuit City didn't allow access to its books.

Both chains have suffered as more people turn to the Internet to rent films and buy computers and TVs. Circuit City is firing-higher paid workers to reduce costs as same-store sales decline, while Dallas-based Blockbuster lost money last year and is cutting marketing costs and shedding unprofitable customers.

``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,'' Blockbuster said in the statement.

An message left for Circuit City spokesman Bill Cimino before U.S. business hours wasn't immediately returned.

Richmond, Virginia-based Circuit City closed at $3.90 last week, giving the company a market value of $657 million. The shares have tumbled 80 percent over the past year. Blockbuster fell 12 cents to $3.13 on April 11.

Blockbuster Forecast

Activist investor Mark Wattles, who holds a 6.5 percent stake, has said he wants new management and Circuit City should hire an investment bank to sell the company. Schoonover's plan to turn the company around has included opening smaller stores and reducing staff.

``At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content,'' Blockbuster Chief Executive Officer Jim Keyes said in the statement. ``These strategic initiatives have already improved our financial results.''

Blockbuster also forecast net income of $30 million in the first quarter, today's statement shows. That compares to a $49 million loss in the same period last year.

``As Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process,'' the statement said.

BLOOMBERG