Blockbuster turns its back on Circuit City bid

Movie-rental chain giant Blockbuster announced recently that it was withdrawing its $1 billion bid for consumer electronics chain Circuit City. Blockbuster initially made the proposal on February 17, with due diligence and the announcement being made public last month on April 14.

Chief Executive James Keyes blamed “market conditions” for the demise of the proposed deal, once valued at more than $1.3 billion.

“Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster’s shareholders to proceed with an acquisition of Circuit City,” Keyes said in a statement.

A combination of the two companies would have added up to an $18 billion business, according to Blockbuster’s calculations, but both companies have struggled in the past year. Circuit City posted losses amounting to $200 million at the end of 2008, and Blockbuster has been struggling against Netflix’s huge success in online video rentals.

Read [InfoWorld]