advertisement
advertisement

$5 Billion Blockbuster Wants To Buy $12 Billion Circuit City

Written by Evan Schuman
April 14th, 2008

Blockbuster is trying to acquire Circuit City–a chain that is reporting twice its annual revenue–by offering a 50 percent per-share premium, Blockbuster announced early on April 14.

Blockbuster’s statement said it has been talking with Circuit City for months, but "Circuit City has failed to provide the due diligence necessary to allow Blockbuster to make a definitive proposal."

In a thinly veiled threat of a potential hostile takeover attempt, Blockbuster’s statement said "Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."

Circuit City is more than twice as large as Blockbuster. The company reported some $12 billion in revenue for its last full fiscal year, compared with the $5.5 billion reported by Blockbuster for its last full fiscal year. And both companies have been struggling with profits, with each reporting losses for last year.


advertisement

One Comment | Read $5 Billion Blockbuster Wants To Buy $12 Billion Circuit City

  1. Bob Scheier Says:

    Ths is one of those mergers between two struggling companies that is always so hard to understand. Circuit City seems to lack the clout or merchandising flair to compete with Best Buy (especially in a down retail market) and as for Blockbuster…well, when was the last time you rented a video? Circuit City is all about the hardware (TVs, cell phones, and other electronics) and BlockBuster is about the software (entertainment.) No mergers that tried to combine these two elements has worked well, to my knowledge.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.