updated 10:15 am EDT, Fri May 9, 2008
CCity Evading BBuster
Circuit City today sent mixed responses to Blockbuster's proposed takeover of the company. The suffering electronics retailer now says it will let both Blockbuster and its backing investor Carl Icahn conduct due diligence, effectively letting the movie rental house explore Circuit City's finances to judge whether the buyout would be practical. Circuit City warns, however, that the agreement isn't a sign that it has finished investigating Blockbuster's bid and that the company believes it can succeed without help from an outside buyer.
"While the Circuit City board has confidence in the company's ability to successfully implement its turnaround plan and generate shareholder value, we believe that we can best serve the interests of our shareholders by exploring all possible alternatives," says company chief Philip Schoonover.
The retailer adds that it has brought on financial institution Goldman Sachs to help mull potential options, further indicating its reluctance to accept the Blockbuster deal as-is.
Blockbuster first suggested a takeover last month in a plan that would give it control over both hardware and movie services, allowing it to sell the devices used to play its movie library as well as to boost the awareness of the movies themselves. Although recovering, the company has been eager to escape its typical focus on movies alone and is allegedly developing a media hub with another company that would tap into the Blockbuster-owned Movielink service.