Fry's resumes talks with Cyberian Outpost

The California-based electronics retailer has resumed negotiations with Cyberian Outpost just days after announcing an agreement to acquire the assets of Outpost rival Egghead.com. Fry's, which owns about 11 percent of Outpost stock, broke off negotiations with Outpost earlier this month.

"Fry's will continue to evaluate the business and operations of (Outpost)," Fry's said in a document filed with the Securities and Exchange Commission. "Depending on future developments, the plans of (Fry's) may change, and Fry's will take such actions as they deem appropriate under the circumstances.

"There can be no assurance that these discussions will result in any formal acquisition proposal or any definitive agreement concerning the acquisition of the company by Fry's."

Representatives for Fry's and Outpost did not return calls seeking comment.

Closely held Fry's operates a successful chain of brick-and-mortar electronics stores in California, Oregon, Texas and Arizona. To date, the company has made few moves online, offering only Internet access through the Web site it launched last summer.

But Fry's has been revving up its online strategy lately. It took a 10-percent stake in Outpost in May, then last month offered to buy the company for 70 cents per share, or about $22 million. Fry's withdrew that offer immediately before revealing its plan to buy the assets of Egghead.com for $10 million. Egghead filed for Ch. 11 bankruptcy earlier this month.

The agreement with Egghead is subject to the approval of the bankruptcy court. At least three other parties, including Buy.com founder Scott Blum, have shown interest in acquiring Egghead's assets.

Outpost signed a merger deal with PC Connection in May. As part of the agreement, PC Connection agreed to exchange 0.035 to 0.062 shares of its stock for each share of Outpost stock, depending on Outpost's revenue and PC Connection's stock price at the time the merger is complete.

Last week, Outpost indicated that deal, which must be approved by shareholders, could be foundering. As part of the merger agreement, Outpost committed that its tangible value would be no less than $14 million on Aug. 31. But in a separate SEC filing, Outpost said it told PC Connection that it might not fulfill the net worth requirement of its merger agreement. PC Connection told Outpost that it would not waive that requirement for the merger, Outpost said in the filing.

PC Connection is also participating in the negotiations with Fry's and Outpost, Outpost said in Wednesday's filing.

Representatives of PC Connection did not return calls seeking comment.