Circuit City Stores Inc. said Friday that it has hired Goldman Sachs & Co. to help the company in exploring strategic alternatives and said it will allow video-rental chain Blockbuster Inc. and its largest shareholder, Carl Icahn, to review its books.
Blockbuster had previously offered to acquire Richmond, Va.-based Circuit City America's No. 2 electronics chain, for at least $6 a share in cash, subject to due diligence.
Circuit City said that billionaire investor Carl Icahn, who is Blockbuster's largest shareholder, had pledged to buy the company on his own if Blockbuster should be unable to finance the deal.
This written commitment answers some of [the company's] questions with regard to Blockbuster's and Mr. Icahn's previous disclosures, Circuit City said in a news release.
Circuit City released the statement in response to questions with regard to Blockbuster's and Icahn's previous disclosures and accordingly it will allow Blockbuster and Icahn to conduct additional due diligence.
In a separate statement, Blockbuster said it is pleased to have reached an agreement with Circuit City to conduct due diligence and further explore a possible merger between the two companies.
Shares of Circuity City rallied on the news, up 8.6 percent to $5.20 Friday on the New York Stock Exchange. Blockbuster shares declined 3 cents to $2.56.