Blockbuster Inc. yesterday backed away from its $1bn bid for consumer electronics retailer Circuit City citing gloomy “market conditions”.
The movie rental chain’s CEO James Keyes said in a statement: “We have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City."
Last month the struggling US retailer posted a first quarter loss and yet another slide in revenues. In early May Circuit City put itself up for sale. Blockbuster and billionaire Carl Icahn duly stepped forward to discuss possible offers.
Dallas, Texas-based Blockbuster, which has faced less-than-pretty financial results of its own over the past year, at one point said it may offer as much as $1.35bn for Circuit City.
Keyes also insisted that the Blockbuster management team still has faith in the movie rental business.
He said: "We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment."
Wall Street was pleased by Blockbuster’s decision to shun Circuit City: shares in the rental firm jumped nearly 12 per cent in after-hours trading following yesterday’s announcement. Circuit City was left crying into its beer, however - its shares fell some 14 per cent following Blockbuster’s bid withdrawal. ®