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14 Apr 2008
Film rental giant Blockbuster has offered to acquire Circuit City, a US-based chain of consumer electronics stores, for at least $6 per share in cash.
Blockbuster said that the original offer was made in a letter to Circuit City chairman and chief executive Philip Schoonover on 17 February.
However, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal.
Blockbuster is making its proposal public because it believes that "the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company".
The film rental firm said that the combination of the two companies would result in an $18bn global retail enterprise.
"This 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 said in a statement.
Jim Keyes, chairman and chief executive at Blockbuster, said that the proposal offers Circuit City a "significant premium" on its existing stock price.
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Death Throes
So, now we have a huge company that has no idea at all how to grow and remain profitable in it's chosen field offering to buy out another company in exactly the same boat in a different market. Perhaps they can suck up a few more before they all go under. At least the executives and brokers will make a killing while the sucker stockholders all lose. I suppose this is their idea of growth. But in the end, when company A buys company B you only get A+B whatever name you call it. That's not growth - in fact it is a huge waste of the stockholders capital.
Posted by: Wandering 14 Apr 2008