Circuit City Settles With Wattles, to Consider Blockbuster Bid
Putting an end to months of rancor, Circuit City and the firm of activist investor Mark J. Wattles on Friday announced a compromise that will avert a proxy battle at the company’s annual meeting in June.
Meanwhile, in a separate statement, Circuit City said its board has authorized “exploration of strategic alternatives to enhance shareholder value,” meaning that it has allowed Blockbuster Inc. to conduct due diligence in regards to a possible merger. Circuit City agreed to this after receiving a letter from Blockbuster investor Carl Icahn stating that he was prepared to back the bid.
Under the terms of the agreement with Wattles, three members of Wattles Capital Management’s slate will be included as board nominees at the company’s annual meeting, with one of them becoming a member of the Circuit City board’s executive committee. In exchange for that, according to Circuit City’s statement, WCM “has agreed not to solicit proxies in connection with the 2008 Annual Meeting; to vote its shares in support of all of the board’s director nominees at the 2008 Annual Meeting; and to abide by certain confidentiality and standstill provisions.”