Blockbuster takes back Circuit City bid
Blockbuster has taken back its billion-dollar bid for electronics chain Circuit City. Weak sales and stiff competition are partially to blame. Amy Scott reports Circuit City may still be looking for a buyer.
A Blockbuster store in Miami, Fla. (Joe Raedle/Getty Images)
More on Mergers/Acquisitions
TEXT OF STORY
Scott Jagow: Speaking of Circuit City, Blockbuster wanted to buy it for a billion dollars. Now, it doesn't. Here's Amy Scott.
Amy Scott: A Blockbuster-Circuit City deal would have merged two companies that lost money last year. Blockbuster has been shedding business to the likes of Netflix and Wal-Mart.
Analyst Joe Feldman with Telsey Advisory Group says Circuit City has been ailing for years. He says that's thanks to poor retail locations, inferior service, and stiff competition from Best Buy and again, Wal-Mart. Blockbuster pulled the plug on its offer after a closer look at Circuit City's books.
Joe Feldman: They had a pretty weak first quarter. They said the second quarter was gonna be even worse. They've stopped paying a dividend. You know, there's a lot of risk involved with this name now.
Feldman says Blockbuster can still get in on the electronics game. They've got plenty of stores and can buy directly from manufacturers.
Circuit City may need some outside help. In a statement, the company says it's still looking at "strategic alternatives." That may include finding another buyer.
In New York, I'm Amy Scott for Marketplace.
Comments
Comment | Refresh
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.