Analyst says Circuit City, Blockbuster may fit well

On Friday Circuit City said it would open its books to Dallas-based Blockbuster and its largest shareholder, Carl Icahn. Icahn said he would buy the consumer electronics retailer on its own if Blockbuster doesn't find financing.

Video-rental chain Blockbuster had previously announced a takeover bid of just over $1 billion for Circuit City with plans for creating a huge chain that would sell electronic gadgets and rent movies and games.

Tony Wible of Citi Investment Research said the potential deal could provide Blockbuster with increased revenue and cost savings. He estimates the transaction could lift the value of Blockbuster's stock to nearly $11.

"We believe it is key to realize that a Blockbuster-owned Circuit City will likely look very different than today as Blockbuster integrates Circuit City stores into its restructuring plans," he wrote in a client note.

Even if the deal does not come to fruition, Wible anticipates Blockbuster will benefit from factors including its movie lineup and an improved Total Access plan.

Total Access is Blockbuster's hybrid online and in-store video rental plan, which lets customers rent videos online that are then mailed to them and can be exchanged in Blockbuster stores for other rentals.

Blockbuster's stock added 18 cents to $2.84 in morning trading. Circuit City shares rose 18 cents to $5.25.