Blockbuster (BBI) has finally come to the same realisation most of the world had in April: There’s no good reason for it to buy Circuit City (CC), another foundering retailer. So it’s ditching those efforts, “spooked by souring market conditions” and whatever it found in Circuit City’s books, the WSJ reports ($).
The video-rental chain’s move to withdraw its bid leaves Circuit City scrambling to ensure its future. Circuit City had reluctantly agreed to allow Blockbuster and others access to its books after big stockholders pushed for the move. The company could now continue to seek a buyer, or raise new financing to permit it to go it alone. …
Circuit City played down Blockbuster’s move by saying its board continues to evaluate all options, including a sale. In a statement, it said the review “is an active and an ongoing process.” …
Circuit City’s hiring of Goldman Sachs Group to guide a review “was not dependent on Blockbuster’s participation,” Circuit City Chief Executive Officer Phillip J. Schoonover said in a statement Tuesday.
While the deal was popular with Carl Icahn, Blockbuster’s biggest shareholder, it never caught on with Circuit City shareholders; CC traded below the offer price of $6-8 per share the whole time. Shares closed Tuesday at $2.55.
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