Circuit City Defiant, Blockbuster Mulls Options21 Apr, 2008 By: Erik Gruenwedel
Circuit City Stores Inc. remained defiant toward attempts by Blockbuster Inc. to obtain access to its books following disclosure last week of the DVD rental giant's unsolicited $1.3 billion takeover bid.
Blockbuster reportedly said it was continuing to explore funding options, including borrowing from its own $247 million debt facility or using Circuit City's available cash, receivables, tax refunds and related assets, including sale of its Canadian operations, to finance the transaction.
It is precisely the latter that has Circuit City doubting the viability of Blockbuster's $6- to $8-per-share cash offer.
A spokesperson for the Richmond, Va.-based electronics retailer said that until Dallas-based Blockbuster could provide proof of its ability to fund the deal, its books would remain closed.
Analysts have expressed near unanimous condemnation about the deal. Last weekend, comedian Bill Maher lampooned both companies, citing his own mergers and acquisitions rule, namely that “lame companies are not allowed to merge.”
Blockbuster CEO Jim Keyes told The Wall Street Journal the rental company was not prepared to engage in a hostile takeover attempt and would only continue with the merger if conditions warranted the effort.
“The heart of the matter is that we still need further facts,” Keyes told the WSJ. “With those facts, we can choose whether we proceed or get back to our continued success.”