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Circuit City (CC)
It looks like Circuit City is getting ready to call it quits and throw in the towel. The electronic retailer announced that it is hiring Goldman Sachs to advise it on strategic alternatives (which, as we all know, is just another way of 'we are looking to sell the place'). Blockbuster (BBI: Charts, News, Offers), the video rental chain store, made an unsolicited bid for CC in February but only disclosed it publicly last month after being stonewalled by CC management. Obviously, the offer has been languishing on the table for a while now, but today, CC is taking a fresh look at it after Blockbuster answered one of the big question marks associated with the deal, namely, how is a company with a market cap of only $500 million going to come up with the dough to buy CC for $1 billion especially in a credit market where cheap cash is hard to come by. Well, apparently, the answer to that little question is Carl Icahn. The billionaire activist investor who owns about 10% of Blockbuster has backstopped the CC bid, i.e. he is saying that if Blockbuster can't come up with the money to buy CC and/or if the deal does not get shareholder approval, he will buy CC. This no doubt ratchets up the pressure on the CC board to do a deal as shareholders have been extremely receptive to the idea of selling all along. But should CC take the cash and run? Read more

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