“Our vision for the “new” Blockbuster is to be the most convenient source for media entertainment. We have undertaken a series of strategic initiatives including enhancement of our core rental business; a transition from solely rental to a concentration on consumer retail; and development of the fast-growing digital download market,” Keyes wrote, adding that the combination of Blockbuster and Circuit City would result in an $18 billion retail enterprise.
Keyes continued to describe how the two seemingly different businesses would complement one another. “We would seek to differentiate products in both Blockbuster and Circuit City stores by offering exclusive content and content-enabled devices. Both companies would benefit from complementary products, marketing, management strengths, technology and distribution and the resulting synergies would significantly improve consolidated financial performance,” he wrote.
In his letter, Keyes requested from Schoonover a response no later than February 21. With that date past, Blockbuster is now turning to Circuit City’s shareholders to determine the future fate of the second largest electronics retailer in the U.S.
“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,” Keyes said on Monday. “We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies.”
Blockbuster to buy Circuit City: Um, what?
I think most people will have my first reaction when reading this headline, but Blockbuster is indeed making a bid to purchase Circuit City. Why? So that they can become the “most convenient source for media entertainment.” Uh, sure….