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Circuit City retains Goldman Sachs to explore 'strategic alternatives'

Electronics retailer says it will allow Carl Icahn and Blockbuster to conduct due diligence in the latter's takeover bid.

Circuit City has retained Goldman Sachs to help it explore "strategic alternatives to enhance shareholder value," the electronics retailer said Friday.

The struggling company recently became the target of a roughly $1 billion takeover bid from movie rental giant Blockbuster. Circuit City said Friday it has received a letter from Blockbuster responding to Circuit City's request for information concerning Blockbuster's ability to successfully finance its proposal and to secure shareholder approval.

Blockbuster's letter included a note from Carl Icahn, a Blockbuster director and its largest shareholder. The note stated that, assuming his satisfaction with the due diligence review, he and his affiliates "stand ready" to purchase Circuit City if Blockbuster can't secure financing or shareholder approval. Circuit City officials said they will grant that due diligence.

"While the Circuit City board has confidence in the company's ability to successfully implement its turnaround plan and generate shareholder value, we believe that we can best serve the interests of our shareholders by exploring all possible alternatives to enhance shareholder value," Circuit City CEO Philip Schoonover said in a statement. "Let me be clear that our decision to allow Blockbuster and Carl Icahn to conduct due diligence should not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company's value, or that it has settled upon a particular strategic course of action."