Hostile Blockbuster Bid Scorned by Circuit City

A hostile bid by Blockbuster, the financially ailing video-rental giant, to acquire Circuit City Stores for more than $1 billion in cash left Wall Street befuddled on Monday, as investors questioned the benefits of an unlikely union of two troubled companies. Blockbuster is seeking to expand its struggling rental franchise into a one-stop shop for electronics and entertainment products. Its executives said that Circuit City, despite poor sales, could provide additional retail space and complementary products like television sets and DVD players. But Circuit City said it doubted that Blockbuster could find adequate financing to seal the deal, despite assurances that Carl C. Icahn, the activist investor who has a significant stake in Blockbuster, would provide support. And Wall Street wondered why Blockbuster would take on a new financial hurdle even as it struggles to compete with online rental outlets like Netflix and cable television companies that offer access to a wide collection of films with a click of a remote control device. Sun Microsystems CEO Scott McNealy likened the deal to two garbage trucks backing into each other in slow motion.
http://www.nytimes.com/2008/04/15/technology/15circuit.html?ref=todayspaper
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