CC - they'd better take - great for CC shareholders, but kills the short
Circuit City Gets $3.25B Buyout Offer
Tuesday February 15, 8:57 am ET
Circuit City Gets an Unsolicited $3.25B Buyout Offer From a Firm That Wants to Take Co. Private
RICHMOND, Va. (AP) -- Circuit City Stores Inc. said Tuesday that an investment firm made an unsolicited offer to buy the company for $3.25 bil1lion, or $17 per share, and take it private. The electronics retailer's shares soared in early trading.
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Circuit City shares jumped $3.27, or 23 percent, to $17.50 during premarket trading on electronic exchanges. The stock has traded in a 52-week range of $10.18 to $17.87.
Highfields Capital Management's cash bid, worth about $3.25 billion, represented a 20 percent premium to Circuit City's share price of $14.26 at the close of trading Monday.
In a Feb. 11 letter to the store's directors, Highfields said while some steps have been taken to address Circuit City's operating performance and capital structure, it is "disappointed that management has been unable to move more aggressively." The letter indicated the two sides conducted a meeting on Feb. 9.
"We are convinced that as a private company, Circuit City will be able to effect change more rapidly with fewer constraints," Highfields said in its letter.
Circuit City said its directors will "carefully" evaluate the proposal, as well as other available alternatives. It has retained Goldman Sachs as an adviser, while Highfields is being advised by UBS Investment Bank.
Circuit City had 2004 sales of $9.75 billion.
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