Most Retail Detail readers are skeptical about Blockbuster's attempted takeover of Circuit City . Carl Icahn is financing this deal but Circuit City management seems to be resisting it. What's interesting is that Circuit City is now in play.
Activist Investor Mark Wattles (former CEO of Blockbuster-competitor Hollywood Entertainment) says that he'll back any deal that offers $6 a share for Circuit City. With Wattles already pushing for changes in the boardroom at CC, this deal is going to be an exciting one.
Here's what some retail detail readers are thinking--many of you are skeptical but a few of you saw some value in this potential deal.
Paul Tyson writes:
"Blockbuster reckons that if they can combine their lead balloon with another lead balloon, Circuit City, the two will then soar. Well at least it is working for Circuit City in the short term....A canny investor would have got[ten] out of these two stocks a long long time ago....This deal is a black hole."
Jeff Jacobs says that he would reluctantly change Blockbuster and Circuit City stores in order to challenge Wal-Mart and Best Buy. He wouldn't try to fight on price and wouldn't try to match Best Buy's selection range either.. Merchandising and experience are the key areas that he sees as open for competition:
"Could they create a new relaxing experience and outflank BBY and WMT’s massive big-box inundation, not (fail to) outmuscle them? Target has, so maybe this deal doesn’t have to be more failed retail hubris. If price alone was "it" we’d all buy our clothes at Wal-Mart."
Jeffrey Vargas of Toronto, Canada points to one a positive factor in favor of this Blockbuster-Circuit City merger:
"The timing of making this type of changes within these two companies is impeccable. It is better to do this during a downturn because the stocks are cheap and investor's expectations are quite low. In addition, the electronic retail space is doing better than the clothing and other retailers. People need to be entertained and renting or buying movies and playing video games is much cheaper than going out to restaurants or vacation trips."
Ronald Moscoso says that he thinks BBI-CC will offer exclusive movies for Blu-ray that no other company will be able to offer. He also thinks that Blockbuster will use CC's Firedog team to offer installation of all set top boxes and high speed internet of those purchases.
I'm on "Closing Bell" anchor-duty today but I'll be following this story as it develops.
Questions? Comments? email@example.com