Now this would be an interesting but crazy sounding fit.
That brings me to Monday's rather stunning news that Blockbuster, the giant video chain that's seen better days, is trying to buy Circuit City, the giant consumer electronics retail chain that's also seen better days. The offer, which was made in February and is just now becoming public, is worth $6 to $8 per share--between $1 billion and $1.3 billion total. It's about a 54 percent premium above Circuit City's value before the news broke.
When I first read the news I thought it was Best Buy trying to buy Circuit City and dominate the electronics retailing landscape. Then I read closer and saw that it was Blockbuster instead and I could hardly believe it. It would be just like if Merck freaked out and bought out Continental Airlines just to "try something new."
However it would be an interesting example of a content provider trying to buy out a company that sells the gear to watch the content on. Like trying to form a cheapy Apple. Maybe Circuit Cities would turn into a hybrid store where you can rent videos on one floor and buy computer stuff, TVs, and DVDs on another. The article above throws water on this hybrid-thing competing with the Apple Stores.
I guess selling the Blue-Ray Player and renting out the the Blue-Ray DVDs at the same place is what Blockbuster was going for. Hmm, maybe Blockbuster was thinking about going into the Rent-To-Own type of Business where they would rent DVDs, video games, and even the DVD player and HD-TV at a high margin interest rates. In any case I think Blockbuster management should stick to turning the company around and ignore any further crazy merger mania.
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