From AP via The New York Times:
Blockbuster Inc. said Monday it has offered to pay more than $1 billion for struggling Circuit City Stores Inc., but the nation's second biggest consumer electronics chain questioned whether the movie-rental company can finance the deal.
Blockbuster Chief Executive James Keyes said combining the companies would create a chain that could sell portable devices and entertainment for them, much like Apple Inc.'s stores.
Keyes said the offer is supported by Blockbuster board member Carl Icahn, who could be a source of financing for the deal.
Circuit City shares climbed 35 percent in morning trading.
Blockbuster, which hopes to enlist Circuit City shareholder support for its bid by disclosing previously private communications with Circuit City's leaders, has had troubles of its own competing with online movie rental operators like Netflix Inc.
Circuit City said it has exchanged information with Blockbuster but wasn't convinced how the movie-rental chain would finance its offer. Circuit City advised its shareholders to take no action until the company board reviews the bid.
Blockbuster said in its February letter it is willing to pursue alternative deal structures which would enable Circuit City shareholders to receive stock. The company would expect to fund the takeover with borrowings and issuance of additional stock through a rights offering to existing shareholders.
Blockbuster says that it requested a response by Feb. 21, but, to date, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive takeover proposal. Blockbuster is asking for such information as Circuit City's long-term corporate strategic plan and outlook, detailed store-level performance data and current inventory aging schedules, among other items.
No comments:
Post a Comment