There was no ovation for Blockbuster (BBI) on Monday after it said that it wants to create a nationwide home entertainment power by offering more than $1 billion for Circuit City (CC).
Shares in the No. 1 video-rental company fell 10% to $2.81 after it disclosed its interest in a deal — assuming it finds no surprises in the books of the No. 2 consumer electronics chain.
A Feb. 17 letter offered at least $6 a share, a 54% premium over Circuit City’s closing price on Friday. Circuit City shares soared 27% to $4.97 Monday on the news.
The plan to blend entertainment hardware, software and service “is a game changer,” Blockbuster CEO Jim Keyes says. “As a customer, if you have any experience with digital content, trying to load devices or watch movies on a PC, you’re probably thinking: There’s got to be a better way. We think we have an opportunity to break through the consumer confusion and frustration.”
Circuit City declined to comment but said in a statement that it won’t open its books to Blockbuster’s “highly conditional” offer without more assurance that Blockbuster can raise enough cash.
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