Circuit City Stores, Inc. (NYSE: CC) has finally capitulated. There are two separate announcements this morning, but in reality it is all part of the same issue. This will allow the company to deal with the activist pressure, and may ultimately lead to the company either being run by a better team or become a subsidiary of another company.
The company just issued a release that it has reached an agreement with Wattles Capital Management.
Circuit City will choose three board members proposed by Wattles, and now Wattles has agreed not to solicit proxies related to the 2008 annual meeting. In addition, two of Circuit City’s current board members will step down by the annual meeting of 2009.
Circuit City has also announced that it has hired Goldman Sachs (NYSE: GS) in an effort to explore strategic alternatives to enhance shareholder value. The company even agreed to allow Blockbuster Inc. (NYSE: BBI) and Carl Icahn to conduct due diligence related to its proposal to acquire the company.
Shares of Circuit City are up 11% at $5.35 in pre-market trading, and its 52-week trading range is $3.44 to $17.97. Shareholders must be thinking, "It’s about freakin’ time."
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Jon C. Ogg
May 9, 2008
Jon Ogg is also a producer and editor of the "10 Stocks Under $10" weekly newsletter; he does not own securities in the companies he covers.