Blockbuster Inc. said today that it has offered to buy Circuit City Stores Inc. for as much as $1.33 billion in a deal aimed at taking advantage of the global trend of putting media content on electronic devices.
The U.S. movie rental giant has offered $6 to $8 per share in cash for Circuit City, depending on the results of a check of Circuit City’s books. The per-share offer represents a huge markup from Circuit City’s closing stock price of $3.90 per share on Friday, and it values the company at between $990 million and $1.33 billion, based on the number of outstanding shares of stock Circuit City reported in its most recent quarterly earnings statement.
A merger of Blockbuster and Circuit City would create an $18 billion global company and substantially improve the financial performance of both companies, Blockbuster said.
The deal would allow Blockbuster to open up new avenues of distribution to better compete with rival Netflix Inc., whose customers order rental discs on the Internet and receive them by mail.
Source: ComputerWorld