Circuit City (CC) To Explore Strategic Alternatives; Lets Blockbuster Conduct Due Diligence

May 9, 2008 8:51 AM EDT

Circuit City Stores, Inc. (NYSE: CC) retained Goldman Sachs & Co. to assist the company in exploring strategic alternatives to enhance shareholder value.

Circuit City also said it will allow Blockbuster (NYSE: BBI) and Icahn to conduct additional due diligence, subject to customary confidentiality arrangement, related to Blockbuster's proposal to acquire the company.

In April, Blockbuster offered to acquire Circuit City for at least $6 per share.

Philip J. Schoonover, chairman, president and chief executive officer of Circuit City, commented, "While the Circuit City board has confidence in the company's ability to successfully implement its turnaround plan and generate shareholder value, we believe that we can best serve the interests of our shareholders by exploring all possible alternatives to enhance shareholder value. 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."

Circuit City also announced that it has reached an agreement with shareholder Wattles Capital Management, LLC regarding board representation that will avert a proxy contest. Wattles Capital has encouraged and fully supports the exploration of strategic alternatives that the board has commenced.

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