Blockbuster said it made the unsolicited approach in February, offering $6 to $8 per share. That represents a premium of 54 percent to 105 percent over Circuit City's closing share price of $3.90 last week, though the troubled retailer's stock traded above $21 last year.
Blockbuster Chief Executive and Chairman Jim Keyes, a former 7-Eleven CEO hired last year with a mandate to turn around Blockbuster, made the offer in a February 17 letter to Circuit City Chief Executive Philip Schoonover, but Blockbuster said Circuit City had so far failed to provide due diligence.
Keyes in the letter said the "new" Blockbuster would be "the most convenient source for media entertainment."
Blockbuster said it made the proposal public "because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."
The combination would result in an $18 billion global retail company that would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices," the company said in its statement.
"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.
It has made store changes, including replacing more than 3,000 workers with lower-paid employees--a move that disrupted its business and upset sales.
Circuit City had an average of 166.5 million shares in its most recent quarter. Its shares closed at $3.90 on the New York Stock Exchange on Friday.
Circuit City and Blockbuster were not available immediately for comment.