Movie rental giant Blockbuster this morning announced that it will take its unsolicited $1 billion takeover bid for ailing electronic retailer Circuit City directly to the company's shareholders. The move comes after months of discussions between the companies, which Blockbuster says have gone absolutely nowhere. Blockbuster's offer amounts to $6 a share; Circuit City's shares are currently trading below $4.
"Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage," Blockbuster chairman and CEO Jim Keyes said in a statement issued this morning. "We look forward to engaging in further conversations with Circuit City and reaching an agreement as soon as possible."
Blockbuster says that a merger with Circuit City would create an $18 billion global retail giant that is uniquely positioned to capitalize on the growing convergence of media content and electronic devices. It says that the company's products are complementary and a natural fit for each other.
Blockbuster is separately investigating the possibility of getting into the hardware market: The company is considering building Apple TV-like set top boxes so that customers of its Blockbuster Online service can rent movies electronically over the Internet and view them on their HDTV displays. Blockbuster already owns an online movie rental service called Movielink, which would form the backend for this device.