Blockbuster offers up to $1.33B for Circuit City

Deal would allow Blockbuster to open up new avenues of distribution to better compete with rival Netflix
By Dan Nystedt, April 14, 2008

Blockbuster has offered to buy Circuit City Stores for as much as $1.33 billion in a deal aimed at taking advantage of the global trend of putting media content on electronic devices, the U.S. movie rental giant said Monday. Blockbuster has offered $6 to $8 per share in cash for Circuit City, depending on the results of a check of Circuit City's books. The per share offer presents a huge markup from Circuit City's closing stock price on Friday of $3.90, and values the company at between $990 million and $1.33 billion, based on the number of outstanding shares of stock Circuit City reported in its most recent quarterly earnings. Merging with Circuit City would create an $18 billion global retail company and substantially improve the financial performance of the two companies, Blockbuster said. The deal would allow Blockbuster to open up new avenues of distribution to better compete with rival Netflix, whose clients order rental discs on the Internet and receive them by mail.

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