Circuit City Continues Considering Choices
Dissolution of Blockbuster bid hits retailer’s shares hard.
July 2, 2008
Circuit City seems poised to continue its sale bid Thursday after Blockbuster pulled out of its bid, citing market conditions.
The company’s stock fell nearly 10% on the news that Circuit City’s potential acquirer had backed away from its initial offer; RBC Capital Markets analysts said the move was “not a big surprise” and that Circuit City remains far from dire straits and can still successfully turn itself around independently.
“Our exploration of strategic alternatives is intended to serve the interests of our shareholders by considering every possible alternative to enhance shareholder value,” said Philip J. Schoonover, president, chairman and CEO of Circuit City. “The board's review was not dependent on Blockbuster's participation. We are diligently working with the parties involved in the process, and intend to continue our thorough approach until such point as the board determines upon a particular strategic course of action. The board has not established a deadline for completing the review."
The analysts noted that while none of Circuit City’s vendors have reduced the company’s financing yet, it remains possible.
Blockbuster shares were up about nine percent in early afternoon trading.
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