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Blockbuster Bids For Circuit City

Dallas — Blockbuster today announced that it has offered to acquire Circuit City Stores for at least $6 per share in cash, subject to due diligence. The offer was made in a letter sent to Circuit City chairman/CEO Phil Schoonover on Feb. 17 on behalf of Blockbuster’s board, which supports the offer, according to a Blockbuster release.

Circuit City stock was at $3.90 a share at Friday’s market close.

Blockbuster said it went public with the offer to spur “timely commencement of the due diligence process,” among other reasons, and cited the potential of a merger. “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,” the release stated. “The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value.”

Blockbuster Chairman chairman/CEO Jim Keyes said, “Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage. We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies.”

The proposal comes as Circuit City is being pursed aggressively by another suitor, Wattles Capital Management, owned by Ultimate Electronics principal Mark Wattles, one of Circuit’s largest shareholders.

Blockbuster is holding a conference call for analysts to discuss the matter this morning.

More to come on