As an investor, I wouldn't want to get any closer to Blockbuster's (NYSE: BBI) patently stupid effort to buy Circuit City (NYSE: CC) than I have to.
But HBK Investments-- which owns 9% of Circuit City and 8 percent of the class A stock of Blockbuster and 5 percent of the company's class B stock -- has filed a 13-D on the matter, attaching a letter urging Circuit City to give Blockbuster access to the material it needs to perform due diligence. HBK added that If Blockbuster withdraws its offer because of a lack of cooperation by Circuit City's Board, we believe Circuit City shareholders will be immediately and substantially damaged."
The fund also added that it might be able to provide financing for the deal, and expressed its confidence in the prospects for a combined company: "We believe that over $300 million per year in increased EBITDA could be realized following an acquisition by maximizing cost savings between Circuit City and Blockbuster."
That's a pretty impressive suggestion, and one that flies in the face of what many analysts have said about the proposed deal. But HBK didn't grow to around $14 billion in assets with stupid decisions, so maybe they're onto something.
Activist investor wades into Circuit City/Blockbuster mess
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Reader Comments (Page 1 of 1)
5-06-2008 @ 12:47PM
batman said...
The reason these investors want this to happen is because the easiest way to fix CC's mess is removing the incompetent CEO and his idiotic plans. I have worked in CC for 2 years as an associate and supervisor. There are some policies that totally kills the morale of the employees. Regional managers, corporate doesn't sell TVs. It's up to the employee and there mood to sell the products. from my experience interacting with customers some of the ideas that blockbuster can be worth while for them. A lot of customers don't like to purchase services, because they are high margin and the customers are smarter than that. but integrating options and making it easy for them to access HD content is a premium customers will pay for, same way netflix took blockbuster down they can do the inverse.
Back to the changing of the not so great ideas CEO. He's smart enough to protect his job. Him and the members of the board are urging shareholders to vote against any takeover without the advice of the board, because they know they are the first to go. Making more money than the competitor's CEO while not being profitable is an amazing job. Economics class can only get you so far, but not down to the customers and we are a customer based company. One of the company's mistake is that customer service is the number one concern of a customer is a falicy, and we don't even offer that becuase we don't always have sufficient staff on the floor to attend to customers. Employees and managers alike hate this fact since we don't get enough hours downloaded to make up for the traffic we get.
5-07-2008 @ 8:48AM
david j phillips said...
The 10Q Detective opines that BBI’s play for the electronic gadgets retailer was an effort to turn Street attention away from its own business failings—and, a last-ditch effort to revive a moribund brick& mortar business model.
Does anyone remember the RadioShack - Blockbuster alliance? In June 2001, 130 “RadioShack Cool Things” boutiques opened in Blockbuster outlets--six months later BBI pulled the plug on the 'pilot program.'
Is BBI is headed for bankruptcy?
http://10qdetective.blogspot.com/2008/05/circuit-city-should-remind-blockbuster.html