Circuit Adds To Board; Bid Expected Soon
By Alan Wolf -- TWICE, 6/24/2008
Richmond, Va. — Circuit City shareholders voted to add activist investor Mark Wattles’ three hand-picked candidates to the company’s board.
The tally, announced this morning at the retailer’s annual shareholder meeting here, follows the recommendation of Circuit’s board, which last month endorsed the trio to avoid a proxy fight with Wattles.
The board was expanded from 12 to 15 seats to accommodate the three additional directors.
Wattles, who controls 6.5 percent of the company’s shares through his investment firm, Wattles Capital Management, also pressured the board to explore alternate strategies, including a sale.
According to an Associated Press report, CEO Phil Schoonover assured investors during the meeting that the company’s turnaround strategy is on track and will return the chain to profitability.
No announcement was made concerning a bid by Blockbuster to buy the No. 2 CE specialty chain, although Wattles said after the meeting that at least three companies are currently looking at Circuit City’s books, the Richmond Times-Dispatch reported. Wattles declined to identify the companies, but implied that Blockbuster was among them. An announcement will likely be made by one of the interested parties within a month, he said.
The shareholder meeting followed yesterday’s 21-percent drop in Circuit City’s share price to a new 52-week low, sparking rumors that Blockbuster had passed on the deal, or that a buyout was now unlikely following the CE chain’s poor first-quarter earnings report.
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