Los Angeles - Ailing video rental chain Blockbuster has dropped its 1.35 billion dollar buyout bid for electronics retailer Circuit City stores, citing market conditions and a negative due diligence process. Shares of the money-losing electronics retailer dropped 17 per cent in early trading Wednesday, valuing the company at just 356 million dollars, less than a third of what Blockbuster said it might pay in April and the company's lowest valuation in 17 years. Blockbuster tabled the unsolicited bid of 6 to 8 dollars a share in February, pending a review of its books. Shares in Blockbuster fell 20 per cent after it unveiled its offer April 14. But they gained 14 per cent Wednesday after cancellation of the bid to reach 2.85 dollars.
Blockbuster has more than 7,700 stores worldwide while Circuit City has some 696 US stores that accounted for 94 per cent of its revenue last year.
Both companies have been steadily losing money in recent years as the internet changes the way people rent videos and buy electronics. Blockbuster envisioned a combination of the companies resulting "in an 18 billion dollar retail enterprise uniquely positioned for the convergence of media content and electronic devices."
