Reuters is reporting that Blockbuster has offered Circuit City between $1 billion to $1.3 billion to acquire the floundering electronics retailer. And now, all that's left for us to do is laugh.
According to Blockbuster, it made the offer in February, offering $6 to $8 per share. Amazingly, that offer represents a premium of 54 percent to 105 percent over Circuit City's current share price of about $3.90, but much lower than last year's high of about $21 per share.
Blockbuster's chief executive, Jim Keyes, believes the merger will create a new Blockbuster that will be "the most convenient source of media entertainment" and its focus would shift from online rentals where it lost miserably to Netflix and turn to a more appealing mix of in-store offerings and DVD sales.
Circuit City has yet to comment on the news, but if you ask me, this deal will be confirmed by the end of the week and the people running the floundering big box retailer will run for cover.
But perhaps what's most compelling about this news isn't that two companies with totally different business models will become one major corporation that offers everything, it's that one poorly run organization is acquiring another. How can that be good for anyone?… Read more