Video rental giant Blockbuster on Monday announced it has offered to purchase Circuit City Stores for $6 to $8 per share, or about $1 billion to $1.3 billion.
Blockbuster initially made the proposal on February 17, but says Circuit City has not provided the due diligence it needs to make a more definitive offer. On Monday, Blockbuster decided to go public. In a letter to Circuit City CEO Philip Schoonover, Blockbuster CEO Jim Keyes notes that the two companies have been discussing proposed tie-ups since December.
Blockbuster says the offer is intended to "capitalize on the growing convergence of media content and electronic devices."
"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. We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies," Keyes said in a statement.
Circuit City issued its own statement saying it had received the offer, and was still evaluating its options.
A combination of the two companies would add up to an $18 billion business, according to Blockbuster's calculations. Both companies have struggled in the past year--Circuit City posted a, and Blockbuster has been fending off Netflix's success in online video rentals, as well as the .
Last week news leaked out that Blockbuster had athat would stream video content directly into homes, which was seen by many as a last-ditch effort to adapt its business.