04.14.2008 — Blockbuster is planning to make a $1 billion-plus bid to acquire Circuit City, appealing directly to the big-box retailers’ shareholders, according to the AP.

Circuit City has had its fair share of difficulties lately, shrinking its residential prewire unit and seeing its stock price drop after poor financial results.

The buyout plan, which comes after management would not respond to acquisition offers from Blockbuster, would price Circuit City stock at a 54 percent premium, according to the AP, from its closing price on Friday.

In a letter to Circuit City’s CEO Philip Schoonover on February 17, Blockbuster’s chairman and CEO Jim Keyes outlines what a combination outlet would look like:

Our vision for the “new” Blockbuster is to be the most convenient source for media entertainment. We have undertaken a series of strategic initiatives including enhancement of our core rental business; a transition from solely rental to a concentration on consumer retail; and development of the fast-growing digital download market. We are pleased that these strategic initiatives have begun to improve our financial results and anticipate further improvement going forward.

The combined companies would total an $18 billion enterprise, according to Blockbuster’s estimations.