In a statement Monday, Blockbuster chairman and CEO Jim Keyes revealed a letter to Circuit City chairman, president and CEO Philip Schoonover that shows his firm has been chasing Circuit City since at least February. "The combination...will result in an $18 billion retail enterprise uniquely positioned for the convergence of media content and electronic devices," Keyes said in the letter.

However, it's not clear what that means, and a conference call Monday didn't really clear things up. It's assumed that each company's products would be offered in joint stores. But while giant Blockbuster has more than 7,800 stores across the globe, and finally reported a same-story sale increase for the fourth quarter, the electronics company has 1,472, albeit bigger, stores in the US and Canada, and recently reported a $320 million loss during its past fiscal year.

Circuit City responded in a statement Monday by putting on the brakes, advising shareholders to take no action. Blockbuster has been unable to satisfy Circuit City and its advisors that the proposal could be financed, said Circuit City officials in the statement.