Buyout
firms continue to gobble up household brand names — most recently Alltel and
Chrysler — so why not Circuit City? Analysts from a number of banks evidently
believe the troubled electronics retailer is a perfect buyout candidate,
according to an
Associated
Press story.
However,
two
years earlier Circuit City Stores Inc. refused a $17 per share offer from
Boston hedge fund Highfields Capital Management LP. What's changed to make a
buyout more palatable? Perhaps the mounting loses. On April 30, the retailer
issued a profit warning that its loss would rise from about $50 million to
$100 million. In addition, its turn-around plan has hit a speed bump thanks to
increased competition from Wal-Mart Stores Inc. and others, leading to a price
war in the flat-panel TV market.
However, CC isn't the only electronics retailer in trouble — so are CompUSA
Inc. and Tweeter Home Entertainment Group Inc., which recently warned it could
file for bankruptcy. Both could make for cheaper takeover targets. However,
the analysts believe CC's position as the sector's second-largest electronics
retailer behind Best Buy Co. makes it a better bet than the smaller
alternatives. —Matthew Wurtzel
See
story from the Associated Press
See
post on BloggingBuyouts
See
related story from 2005 from TheDeal.com
See
earlier post about Tweeter from Dealscape
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