KEY POINTS:
Blockbuster, the most famous name in DVD rentals the world over, has launched an audacious bid to turn itself into a retailer, with a US$1 ($1.26) billion-plus bid for one of the US's biggest electronics chains.
Jim Keyes, Blockbuster chief executive, revealed he had made an offer for Circuit City, the loss-making retailer with 680 stores, and yesterday he appealed to Circuit shareholders to put pressure on it to enter talks.
Circuit City sells TV and video equipment, Hi-Fis and computers, as well as CDs and DVDs. Under Mr Keyes, Blockbuster has been reducing the amount of space it gives over to rentals and increasing stocks of DVDs and computer games for sale, but analysts were taken aback by his plan to move squarely into the retail sector.
Colin McGranahan, analyst at Sanford Bernstein, said the rationale was vague. "Strategically the deal appears to us to be a long-odds attempt by Blockbuster to address its deep structural issues," he said. "We do not see significant synergies."
But Keyes launched a robust defence of the idea with investors yesterday, suggesting he envisioned Blockbuster becoming "a user-friendly one-stop shop with solutions for consumers" akin to Apple's wildly popular high street stores.
- INDEPENDENT
