Rental giant Blockbuster has made a bid to acquire Circuit City at a price beginning at $6 per share, or around $1 billion. Merging of the two companies would result in a global retail enterprise valued at $18 billion, according to Blockbuster.

The proposal in question was originally sent to Circuit City CEO Philip Schoonover back in February, but since the retailer has failed to provide due diligence, Blockbuster decided to go public with the offer and allow shareholders to decide.

DALLAS, April 14 /PRNewswire-FirstCall/ — Blockbuster Inc. (NYSE: BBI) today announced that it has offered to acquire Circuit City Stores, Inc. (NYSE: CC) for at least $6.00 per share in cash, subject to due diligence. The offer was made in a letter sent to Circuit City Chairman and Chief Executive Officer Philip Schoonover on February 17th on behalf of the Blockbuster Board of Directors, which fully supports the offer. Unfortunately, to date, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal. Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company. In addition, as Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process.

Blockbuster noted the combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices. The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value.

Blockbuster Chairman and Chief Executive Officer Jim Keyes said, “Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage. We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies.”

Mr. Keyes continued, “At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content. These strategic initiatives have already improved our financial results. Driven by strong performance in our domestic same-store revenues, we expect first quarter 2008 adjusted EBITDA to be approximately $110 million versus $23 million for the same period last year. Additionally, net income for the first quarter of this year should be $30 million compared to a net loss of $49 million for the first quarter of 2007. These results are a clear demonstration that our strategy is working. We look forward to engaging in further conversations with Circuit City and reaching an agreement as soon as possible.”

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