Looks like the merger will not go through after all. Led by Carl Icahn, Blockbuster had been pushing this deal for months, and Circuit City finally relented a few weeks ago. Now it seems that Blockbuster got a look at Circuit City's books, and decided to go Runaway Bride on everyone.

Blockbuster still wants to stock electronics items at its video stores, but for now, Circuit City won't be the partner handling that end of the biz. Radio Shack would seem like a more logical partner because their stores are much smaller, and although they lack Circuit City's media sales departments (which generate more regular store visits) that's not as much of an issue given that Blockbuster stores already sell DVDs.

In any case, Blockbuster is holding onto a lot of retail space with declining sales per square foot, while Circuit City's also sitting on a lot of empty space with all of the store expansions/relocations they'd been doing the past few years. I thought that BB's takeover bid was largely driven by CC's real estate and lease holdings (and Carl Icahn's history of acquiring companies in order to liquidate their assets), but I guess the value of CC's holdings and their operational issues did not pass muster.

http://www.informationweek.com/news/...leID=208802154