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Blockbuster Ends Bid For Circuit City On 'Market Conditions' |
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| Wednesday July 2nd, 2008 / 0h31 |
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DOW JONES NEWSWIRES Blockbuster Inc. (BBI) has withdrawn its $1-billion-plus offer to buy Circuit City Stores Inc. (CC), saying that because of market conditions, the deal isn't in the best interest of shareholders.
Blockbuster's shares jumped 7.6% in after-hours trading while Circuit City's shares fell another 1.6% to $2.51. During the day, Circuit City's stock dropped 12%.
"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," said Chairman and Chief Executive Jim Keyes in a statement.
Instead, the video-rental chain with use its Blockbuster stores "as a way to diversify the business and better serve the entertainment retail segment," Keyes said. "We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand."
The deal, which involved the smaller Blockbuster trying to swallow bigger, poorly performing Circuit City, began to look shaky last month when the consumer-electronics retailer announced dreadful first-quarter results - a loss triple that of last year, declining sales, dwindling cash on its balance sheet - and suspended its dividend.
Circuit City insisted it was making progress and that its results would start improving later this year, but investors didn't buy it; the stock fell more than 7%, to its lowest level since before Blockbuster made its offer in April.
Blockbuster's due diligence was part of a broader review of strategic alternatives Circuit City began after stumbling from problem to problem, including stiff competition that has cut into its results and a misbegotten effort to save money by replacing thousands of higher-paid salespeople.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=tsYHdg%2FNpAyc%2BzyVAbSVyA%3D%3D. You can use this link on the day this article is published and the following day.
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| Wednesday July 2nd, 2008 / 0h31 |
Source : Dowjones Business News |
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