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 Send to email | Circuit City Opens Books To Blockbuster, Icahn - And Investors Still Hate The Deal in CCBBI |  By Silicon
el 09-May-2008 |
blockbuster.jpg: Paste this image in your site, Myspace, Facebook, Ebay copy this code...
 It looks like Blockbuster (BBI) is going to get a shot at Circuit City (CC)--for better or for worse. The consumer electronics retailer has retained Goldman Sachs to explore options, including Blockbuster's offer to acquire the company for $1.3 billion.
Circuit City says it's satisfied with a pledge from Carl Icahn, Blockbuster's largest shareholder, to purchase the company himself if Blockbuster can't get financing or required shareholder approval. As we've noted a couple times, Carl's backing is pretty much the only thing Blockbuster has going for it in this bid: Investors are skeptical that BBI can pay for CC by itself, and don't think much of the idea, period. But if Carl didn't like it, it wouldn't be happening at all.
Circuit City CEO Philip J. Schoonover's statement:
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 to enhance
shareholder value. Let me be clear that our decision to allow
Blockbuster and Carl Icahn to conduct due diligence should not be taken
as an indication that the board has completed its review of the
Blockbuster proposal, that the board has taken a position on the
company's value or that it has settled upon a particular strategic
course of action."
Blockbuster's response:
We are pleased to have reached an agreement with Circuit City to conduct
due diligence and further explore a possible merger between our two companies.
We continue to believe this combination would create significant cost and
operating synergies therefore unlocking substantial value for our
shareholders. While it is our hope that the due diligence process will
reinforce both the strategic and financial rationale behind the deal, we are
committed to only doing a transaction that provides substantial benefits for
our shareholders.
Investors' response: We still don't love this thing. CC is up quite a bit today, but still hasn't broken $5, which puts it a least a buck under the low end of the $6 to $8 that Blockbuster is offering. Meanwhile BBI is close to a 52-week low, at $2.68.
See Also: Blockbuster: Carl Icahn Loves Our Circuit City Bid. Really.
BlockBuster: Did We Mention That Carl Icahn Loves Our Circuit City Bid?
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