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RICHMOND, VA-Dallas-based Blockbuster Inc. has gone public with its bid to buy the struggling number two electronics chain Circuit City for between $6 to $8 a share, or about $1.3 billion. However, the move has left many pundits, analysts and plain customers shaking their heads about what the baby between the two giants would look like, and how Blockbuster would pay for it.

In a statement Monday, Blockbuster chairman and CEO Jim Keyes revealed a letter to Circuit City chairman, president and CEO Philip Schoonover that shows his firm has been chasing Circuit City since at least February. “The combination…will result in an $18 billion retail enterprise uniquely positioned for the convergence of media content and electronic devices,” Keyes said in the letter.

However, it’s not clear what that means, and a conference call Monday didn’t really clear things up. It’s assumed that each company’s products would be offered in joint stores. But while giant Blockbuster has more than 7,800 stores across the globe, and finally reported a same-story sale increase for the fourth quarter, the electronics company has 1,472, albeit bigger, stores in the US and Canada, and recently reported a $320 million loss during its past fiscal year.

Circuit City responded in a statement Monday by putting on the brakes, advising shareholders to take no action. Blockbuster has been unable to satisfy Circuit City and its advisors that the proposal could be financed, said Circuit City officials in the statement.

Blockbuster has said it can find the cash through a stock sale and financing. However, Circuit City officials said there are doubts it can be done, especially in the current day’s economy. Officials added, “In particular, Blockbuster’s proposal appears to contemplate a rights offering of unprecedented size, relative to the issuing company’s market capitalization, and at a price that is at a significant premium to Blockbuster’s current market price. Circuit City’s advisors have noted that most rights offerings, of which there have been very few in the United States, occur at discounts to market.”

While Blockbuster’s stock dropped from 10% to $2.81 per share Monday, Circuit City’s actually rose to a two-month high and ended the day at $4.97 per share. The electronics stock has been on a slide since it was at $19 per share almost a year ago, and was up around $30 per share two years ago, it’s five-year peak.

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