Blockbuster bids over $1B for Circuit City, looks to rival Apple stores
Movie rental house Blockbuster has made an unsolicited takeover bid for struggling electronics retailer Circuit City, a move that aims to combine the stores of both companies into "a game-changing retail concept" akin to Apple Inc.'s widely successful international retail operation.
Blockbuster made the all-cash offer of $6.00 to $8.00 per share in a February 17th letter to Circuit City's chairman following months of informal negotiations between the two companies, the company revealed in a statement Monday. Based on the closing price of Circuit City's 168.4 million shares on December 31, 2007, the deal values the No. 2 US electronics retailer at approximately $1.01 to $1.35 billion.
Blockbuster said the combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices, which has thus far been dominated by the efforts of Cupertino-based Apple through its tightly-knit ecosystem of hardware, software, and online services.
Word of the offer comes a week after reports suggested that Blockbuster was also evaluating a plan to enter the electronics hardware business with a set-top-box that, like Apple TV, would allow customers of its Movielink service to stream movie rentals to their high-definition TV sets.
"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," said Blockbuster chief executive Jim Keyes. "We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies."
Circuit City, which operates nearly 700 stores across the US, had yet to respond to Blockbuster's offer as of Monday, compelling the movie rental chain to make its proposal public because "it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."
Should the deal ultimately receive approval, it will form a combined retail chain of over 9,500 stores, including nearly 6,000 in the US. By comparison, Apple along with electronics retail partner Best Buy currently operate around 800 US-based retail points for the former's electronic device offerings.
Blockbuster isn't the only technology player looking to replicate the success of Apple's retail business. Last week it was reported the Microsoft is also mulling the prospect of opening a self-branded chain of retail stores to promote its Windows franchise.
Blockbuster made the all-cash offer of $6.00 to $8.00 per share in a February 17th letter to Circuit City's chairman following months of informal negotiations between the two companies, the company revealed in a statement Monday. Based on the closing price of Circuit City's 168.4 million shares on December 31, 2007, the deal values the No. 2 US electronics retailer at approximately $1.01 to $1.35 billion.
Blockbuster said the combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices, which has thus far been dominated by the efforts of Cupertino-based Apple through its tightly-knit ecosystem of hardware, software, and online services.
Word of the offer comes a week after reports suggested that Blockbuster was also evaluating a plan to enter the electronics hardware business with a set-top-box that, like Apple TV, would allow customers of its Movielink service to stream movie rentals to their high-definition TV sets.
"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," said Blockbuster chief executive Jim Keyes. "We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies."
Circuit City, which operates nearly 700 stores across the US, had yet to respond to Blockbuster's offer as of Monday, compelling the movie rental chain to make its proposal public because "it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."
Should the deal ultimately receive approval, it will form a combined retail chain of over 9,500 stores, including nearly 6,000 in the US. By comparison, Apple along with electronics retail partner Best Buy currently operate around 800 US-based retail points for the former's electronic device offerings.
Blockbuster isn't the only technology player looking to replicate the success of Apple's retail business. Last week it was reported the Microsoft is also mulling the prospect of opening a self-branded chain of retail stores to promote its Windows franchise.
Comments
But the two of them together. THINK of the synergy: CityBlock or CircuitBuster.
Lol is CC going to be a rent to own type operation?
I'd scrap everything, and do this
? Use the CC stores as more of a "premium" electronics retailer w/out premium pricing
? Make sure you have staff that knows what they're talking about
? Offer a more "personal" shopping experience to differentiate from best buy
? Make sure every store has great working demo equipment
? Turn the Blockbuster stores into "mini" stores that offer service for your gear, focusing on "new" gadgets and electronics, maybe have store events like Apple does, hype new products, etc.
? Have a TON of DVD/Bluray rental kiosks in all stores w/ competitive pricing to netflix- use these to draw people into the store to buy new stuff
? Give me a "store of the future" feel when I walk into the store
The main thing that I hate about big box electronic stores is a lot of their demo equipment is broken and setup terribly. They never have the newest thing out on the shelf, internet access is blocked, and you can't actually "use" the stuff before you buy it. Plus, *most* of the people who work there don't know jack about what they're selling.
If this happens, I expect a thoroughly half-assed effort.
Doesn't it seem rather pitiful to see articles like this one in which some company always has a plan to "take on" or "rival" Apple. For a company often declared as irrelevant or "niche" by pundits Apple sure seems to know how to rock the boat.
Last week it was reported the Microsoft is also mulling the prospect of opening a self-branded chain of retail stores to promote its Windows franchise.
[ View this article at AppleInsider.com ]
promote?
And a note about Circuit City... I used to be a salesperson at a CC in Florida in the early 1990s. We had to undergo two weeks of intensive off-site sales training before CC would even let us out on the floor to talk to customers, much less sell anything to them. We had to know all our products in our department up one side and down the other, so we would be prepared for any question that would be asked.
Years later, when I moved to California, I was appalled at the condition of the CCs I visited. No one on the floor knew a damn thing about anything. Unless you wanted a TV, the selection of products was terrible. I think this was about the time they instituted the "no salesperson will approach you" policy. I understand why people dislike overly aggressive salespeople (which we were not trained to be, BTW), but at least employ people who can answer a basic question. In English.
This merger is doomed to fail.
GTSC
Doesn't it seem rather pitiful to see articles like this one in which some company always has a plan to "take on" or "rival" Apple. For a company often declared as irrelevant or "niche" by pundits Apple sure seems to know how to rock the boat.
BlockBuster isn't taking on or rivaling Apple here.
Dying rental company + Mostly mediocre electronics store = success?