Blockbuster Withdraws $1 Billion-Plus Bid for Circuit City

Authored by Mark Hefflinger on July 2, 2008 - 7:18am.

Dallas - Blockbuster (NYSE: BBI) announced on Wednesday that it has decided to withdraw its $1 billion-plus bid to acquire electronics and media retailer Circuit City (NYSE: CC), citing market conditions. "Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City," said Blockbuster chairman and CEO Jim Keyes. "We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand.

"We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment."

The combination would have created a company with 9,300 stores that sold electronics devices as well as rented movies and games.

For its part, Virginia-based Circuit City said it will continue to seek strategic alternatives to enhance shareholder value, adding that its review "was not dependent on Blockbuster's participation."

Shares of Circuit City were down over 10% Wednesday on the news.