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Blockbuster will not acquire Circuit City


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Market conditions part of the reason

Blockbuster will drop their efforts to acquire electronic retailer Circuit City after completing their due diligence investigation. While Blockbuster was less than specific, they cited changing market conditions being a contributing factor to their decision not to move forward.

CEO Jim Keyes suggested that the merger would not be in the best interests of shareholders of either company. He did leave the door open, however, for looking at a variety of options and strategic alliances moving forward to expand the company.

Keyes is very experienced in the retail market space from his years at 7-Eleven and was thought to be trying to get back into the retailing market space that he knows best in an effort to evolve the company.

Many believe that the DVD rental business is changing with the advent of DVD rental Kiosks, as well as electronic download, and the pay-per-view options offered by cable and satellite providers. These changes have contributed to a continued decline in revenue for movie rental retailers like Blockbuster.

As for options for Circuit City, they will continue to be under pressure to produce and improve their bottom line. According to various reports, Mark Watter, who owns more than a 6.5% stake in the company, is pushing Circuit City to put itself on the auction block and to start to look at offers from a variety of sources.

Last modified on 03 July 2008
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