Shareholder Says Several Firms Interested in Buying Circuit City

Circuit City's activist investor Mark Wattles said yesterday that several firms are interested in purchasing the beleaguered Richmond electronics retailer and that he expects a deal to be announced within a month.

Circuit City declined to comment on Wattles's statement, which came after the company held its annual shareholders meeting at the University of Richmond. Backed by billionaire investor and board member Carl C. Icahn, Blockbuster has publicly announced its desire to buy the company for $6 to $8 per share, and Circuit City has retained Goldman Sachs to advise it on "strategic options."

Wattles, founder of Hollywood Video, said he met briefly with Goldman Sachs on Sunday evening and with Circuit City chief executive Philip Schoonover yesterday morning. Wattles said Schoonover expressed support for the sale of Circuit City. The retailer had originally expressed doubts about opening its books to Blockbuster for due diligence.

Schoonover "has a genuine belief that Circuit City will be much more successful in private hands than public hands," Wattles said.

About 150 investors attended the shareholders meeting, which was focused on the company's operating performance. Circuit City said last week that it is suspending its dividend to conserve cash and expects to record a loss from continuing operations before income taxes of $170 million to $185 million for the second quarter.

Still, Circuit City spokesman Bill Cimino said yesterday that the retailer believes its efforts are paying off.

"We feel that the turnaround is on progress," he said.

Wattles, who owns a 6.5 percent stake in Circuit City, had called for a management overhaul earlier this year and encouraged the retailer's board to consider putting itself on the auction block. In approving a slate of Circuit City directors yesterday, shareholders agreed to three of Wattles's nominees. One of them will be on the board's executive committee.

Circuit City's stock plummeted Monday to $3.37 -- falling during the day to its lowest point since 1991 -- after an analyst suggested it was unlikely that Blockbuster would follow through on the deal, which could cost as much as $1.35 billion. It closed lower yesterday, at $3.35.

But Wattles said he is confident that the company could fetch a higher price.

"If you can turn this company around, it's worth many multiples of what you're going to pay," he said.