Circuit City runs up the white flag
Of course you can look at our books, Mr. Corporate Raider, sir
Circuit City's days as an independent are numbered. The ailing US electronics retailer last month received an unsolicited bid from Blockbuster, the ailing video store operator.
It was less than whelmed by the approach. But the company capitulated today when presented with Blockbuster's secret weapon: a letter from corporate raider Carl Icahn.
Icahn is a major shareholder and director in Blockbuster, and he says he will buy Circuit City himself if Blockbuster proves unable to raise financing or obtain shareholder approval for the transaction. Icahn is the world's forty-second richest man, with a net worth of $13bn. So no credit crunch there. But he wants some due diligence dalliance with Circuit City before dipping into his back pocket.
So Circuit City has duly opened its books to Blockbuster and Icahn. It says this should "not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company's value or that it has settled upon a particular strategic course of action." Gwana Gwana.
OK, so they are only at second base. And co-operation now means the avoidance of class action suits later. But Circuit City today also hired Goldman Sachs to seek "strategic alternatives to enhance shareholder value". This is code for "someone, buy us, but preferably not Blockbuster, PLEASE".
More from Circuit City here. ®