Blockbuster withdraws Circuit City offer
Will focus on selling electronics in its own storesBlockbuster said late Tuesday that it has withdrawn its offer to buy Circuit City and instead will focus on using its own stores to become a retailer of consumer electronics products.
Blockbuster said in April that it was willing to pay up to $1.3 billion for Circuit City, or $8 per share, but investors evidently knew the deal wasn't going to fly so Circuit City shares were trading at just $2.55 on Tuesday before Blockbuster publicly rescinded its offer.
Blockbuster Investors were always leery of the deal, which is why they hammered shares lower when they learned of Blockbuster's desire to purchase Circuit City three months ago.
For its part, Blockbuster always said that its offer hinged on what it found once it delved into Circuit City's books. Blockbuster CEO Jim Keyes said late Tuesday that "based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City."
Keyes has been saying that Blockbuster intends on being an important retailer of entertainment gadgets so that consumers won't only be able to rent or buy movies and video games but also purchase the devices that play them.
Keyes reiterated that theme Tuesday, but he seemed to close the door on an acquisition of Circuit City or any other existing retail chain.
"We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment," he said.