Circuit City: Goldman Sachs to assist on a deal, most likely with Blockbuster

Circuit City Stores, Inc. (NYSE:CC) goes down for the count.  On Friday they announced it would open its books to Blockbuster Inc. and Blockbuster's largest shareholder, Carl Icahn. So short term investors playing the stock, its time to bail.

Circuit City said Icahn's letter answered some questions related to the potential transaction, and that it would allow the video-rental chain to conduct due diligence in its takeover bid of just over $1 billion with plans for creating a huge chain that would sell electronic gadgets and rent movies and games.

Friday's moves by the Richmond company, including hiring Goldman Sachs & Co. to explore strategic alternatives, eased some lingering concerns over Circuit City's financial future, helping its stock climb in trading.

Shares of Circuit City jumped 28 cents, or 5.9 percent, to $5.07, while Blockbuster's stock fell 2 cents to $2.66.

MASTER PICKS "The board is taking its fiduciary responsibility to its shareholders seriously," Circuit City spokesman Bill Cimino said. "These actions today, the board felt, were in the shareholders' best interest."

While sale of the company to Blockbuster or others isn't necessarily inevitable, Circuit City is going to have make a better case that it is still viable if it's going to stave off pressure from shareholders, BMO Capital Markets analyst Rick Weinhart said in an interview with The Associated Press.

"This is going to require some either bold actions by management to change the direction of the business here shortly, or there's going to have to be some other strategic direction," Weinhart said.

Fellow Masters, the easy money has been made on this stock, don't hang around for much longer.

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