"Let me be clear that our decision to allow Blockbuster and Carl Icahn to conduct due diligence should not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company's value or that it has settled upon a particular strategic course of action," said Philip Schoonover, Circuit City's chairman, president and chief executive officer.
Blockbuster and Icahn's proposal includes a condition, in which, if the former is not able to finance a deal, Ichan and his affiliates could step in and make the acquisition of Circuit City. Ichan, who Forbes magazine listed last year as the 42nd-richest person in the world with a net worth of $13 billion, is chairman of New York City-based Icahn Enterprises, which invests in real estate, home fashion and metals.
Circuit City has hired Goldman Sachs to help management explore strategic alternatives. Management does not expect to announce any steps toward this process unless they are first approved by the board of directors.
Circuit City operates just under 700 superstores throughout the US and has operations in 779 stores and outlets in Canada. The retailer reported a $320-million loss last year and there are plans to open 45 to 55 new units in 2008.
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