Blockuster Makes A Play For Circuit City: Nobody Saw THAT Coming!

I've declared for about a year now that beleagured CE retailer Circuit City is a prime takeover play. However, I never expected beleagured video rental retailer Blockbuster to make a bid!

Yahoo!: Blockbuster offers up to $1.3 bln for Circuit City

Blockbuster Inc said on Monday that it was offering up to $1.3 billion for electronics retailer Circuit City Stores Inc , a bid that left some analysts scratching their heads.
While Blockbuster touted the proposed combination for its synergies, investors were skeptical about its value, and shares of the video rental chain fell nearly 11 percent.

This is far from over. For a start, this is a classic example of tying two pigeons together to make an eagle, and calling it "synergy."

For another thing, the first thought that popped in my head this morning was "How is Blockbuster going to finance this?" Unless BBI's board just found a billion dollars in their sofa cushions just now, it seems like a bit of a stretch, which is an opinion shared by Circuit City's board:

TWICE: Circuit City Questions Funding For Blockbuster Bid

Circuit City is doubtful that Blockbuster can swing the $1 billion it has offered to buy the struggling CE chain, and is unwilling to provide further due diligence information until the funding issue and other “fundamental questions” are answered

Will this go forward? Will this light a fire under Mark Wattles' ass to up the ante on his own takeover plans? Watch this space.

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