Blockbuster Offers $1.3 Billion To Acquire Circuit City

Washington (dbTechno) - Blockbuster Inc. announced on Monday that they have put in a $1.3 billion offer to buy electronic retail giant Circuit City Stores Inc.

The offer was made in a letter dated February 17 2008 to Circuit City CEO Philip Schoonover. He has yet to respond to the bid.

Blockbuster believes that this move will put them in a position where they will be able to combine electronics with digital media. They are currently trying to recover losses from its Total Access online-subscription program, and are doing so at a good pace.

Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage,” Blockbuster CEO James Keyes said in a statement early today. “We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies.”

Many investors were not impressed with the move though, as Blockbuster Inc. shares fell 16% in afternoon trading.

Circuit City has stated that Blockbuster has yet to show that they can finance the bid promised.

The offer comes in at between $6 and $8 per share.