“Blockbuster Inc. said Monday it will take an unsolicited $1 billion-plus bid for Circuit City Stores Inc. directly to shareholders of the nation’s second biggest consumer electronics chain, saying Circuit City has not responded to repeated offers,” David Koenig reports for The Associated Press.
“Blockbuster Chief Executive James Keyes said a deal would create a chain that could sell portable devices and entertainment for them, much like Apple Inc.’s stores,” Koenig reports. “Keyes said the offer is supported by Blockbuster board member Carl Icahn, who could be a source of financing for the deal.”
“Blockbuster, the movie rental chain operator, said it has been in talks with the struggling Circuit City for months regarding an acquisition, and sent a letter Feb. 17 to Circuit City Chairman and Chief Executive Philip Schoonover offering $6 to $8 per share in cash for the company,” Koenig reports.
“Based on Circuit City’s 168.4 million shares outstanding at Dec. 31, 2007, the deal values Circuit City at $1.01 billion to $1.35 billion. The offer also represents a 25 percent to 67 percent premium to Circuit City’s closing stock price of $4.79 on Feb. 15, the last trading day before Blockbuster made its offer, and at least a 54 percent premium to the stock’s closing stock price Friday of $3.90,” Koenig reports.
“Circuit City is the nation’s No. 2 consumer electronics chain after Best Buy Inc.,” Koenig reports. “Circuit City lost the crown of No. 1 American consumer electronics chain to Best Buy in the 1990s as Best Buy built bigger stores in better locations and achieved greater economies of scale.”
Full article here.
MacDailyNews Take: Perhaps if Circuit City sold profitable and strong-selling Apple Macs, they wouldn’t be quite so beleaguered. That said, Blockbuster is already nicely beleaguered themselves, so this would be a marriage made in beleaguered heaven. Blockbuster’s management is obviously delusional and severely out-of-touch. This has “failure” written all over it in flashing neon lights. Come on, guys, this is easy: two wrongs do not make a right.
“Come on, guys, this is easy, two wrongs do not make a right.”
But three lefts do.
What am I missing here? What exactly new and exciting does the merger of one failing business model (Blockbuster) and a marginal electronics retailer (Circuit City) bring to the consumer? I am so confused! Why isn’t Dell also merged into this mess and the combined company just called InCompUSA?
lol is that the smell of desperation in the air?
It might sound shocking but this conjunction will fuse two struggling businesses into one corporate bundle known as Circuit Breaker City. The switchover of all stores will be made in parallel.
I am so sorry. I found my answer. “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,” Blockbuster (BBI, Fortune 500) Chairman and Chief Executive Jim Keyes said in a statement. How very silly of me! This will be a “game-changing retail concept”! I am so fricking impressed! WOW! How could I have missed that?? A “game-changing retail concept”! May I suggest that the only game changing that might go on is an increase in Mr. Keyes net-worth while the employees will be screwed over and the customers will just move on to some other, more gratifying retail concept.
ok, I could kinda see this if blockbuster decided to go from renting movies to creating hardware like Apple TV and selling content that way… but they should be going for a hardware manufacturer not a retailer… you know… there isn’t anything sensable here… if anything this is a worse idea then MS buying Yahoo, at least that has some kind of reasonable idea (even if the idea will fail in the real world) this doesn’t even sound like an idea that should have made it past the napkin in the bar it was thought up in… over Way to many beers…
I miss Tower Records. 🙁
This whole “lets bash every other business that doesn’t embrace macs” is getting pretty old. Believe it or not, there is still plenty of business outside of Appleland and just because one company is looking to capitalize on it doesn’t make it “delusional”.
aCe,
You make me want to take a nap.
It’s proposed mergers like this that are screwing over the tech industry right now. Only Wall Street Execs with rotary phones and email printed daily could see this as a useful merger.
ok you are running vista and what is the problem?
ha
Blockbuster can see where Apple and its Apple Stores likely will be headed next. It’s no great stretch to see iTunes media being sold (i.e., kiosk-style download) or bundled (pre-loaded) with Apple products (particulary the mobile devices) at the Apple Store.
Too late, Johnny ComeLately!
BlockBuster is clearly NOT Johnny On-The-Spot, and they don’t have a Chevy MOPAR cam.
For those who know……
go nap
be ignorant
and repeat
intelligence isn’t for everyone anyways..
@Ampar,
But then you would be on the wrong block, and in certain cities you definitely don’t want to do that!
aCe, has nothing to do with bashing non-Apple businesses. The fact is, these are two struggling chains that don’t add anything to the mix by being shoved together. But then again, Carl Icahn seems to have learned nothing whatsoever from his TWA days.
But he still knows how to scrape money out of a dying business to line his own pockets.
” . . . and in certain cities you definitely don’t want to do that!”
Like in Solder City?
“Solder” = Sadr???
Too early?
IS this also he new Microsoft store? Might as well put all the crap in one place. The store will have Bozo Bar at the back, staffed by 45 year old engineers that remember when Internet Explorer was new.
This will be a promotion out of Microsoft corporate office. You’ll be allowed to be a microsoft entreprenuer and run your own store.
As well, there will be 6 design themes for Basic, home, ultimate, server basic, ultimate….yadda yadda yadda.
Cheers reruns will be showing on the Multimedia PC’s in store. It will be so fresh.
Now I know how the bathroom evolved. All the stuff that stinks goes in one place.
MDN, I love ya and all, but can you please cut back on the beleaguered? I understand that it’s kind of your “thing,” but there are plenty of synonyms for beleaguered. Can we try them out please?
In short, two dinosaurs mating. The problem? They’re two dinosaurs mating…and they’re still doomed.
‘Nuff said.
Peace.
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Olmecmystic
call it ‘BustaCircuit
I once saw a list of the most successful companies. What struck me about the list was that almost every conceivable business was represented. It made me realize that what makes a company successful is not the business they’re in but the way they run the business.
Curcuit City did not lose out to BestBuy because of economies of scale. BestBuy started out offering great deals on older models. You could get a great price at BestBuy if you didn’t absolutely have to have the latest model. They also had (and still have) excellent customer service. Circuit City could have learned something from Best Buy. Too bad they didn’t.