RICHMOND -- Circuit City Stores Inc., which has lost market share to Best Buy Co. Inc. and continues to report disappointing sales, received a $3.25 billion cash buyout offer from a Boston investment firm known for rattling management at underperforming companies.
The nation's number two chain of consumer electronics stores said yesterday that its board of directors will "carefully evaluate" the unsolicited offer from shareholder Highfields Capital Management LP, which contends it has a plan for reversing Circuit City's fortunes.
"We are convinced that as a private company, Circuit City will be able to effect change more rapidly with fewer constraints," Highfields fund managers Jonathon S. Jacobson and Richard L. Grubman wrote in a Feb. 11 letter to W. Alan McCollough, Circuit City's chief executive.
Also yesterday, Circuit City said Philip J. Schoonover, who spent about a decade at Best Buy before joining Circuit City last fall as chief merchandising officer, was named president of the company. McCollough, who previously held that title, will continue to serve as chairman and chief executive.
Shares of Richmond-based Circuit City soared $2.30, or 16.2 percent, to close at $16.53.
Highfields' offer of $17 per share was a premium of almost 20 percent over Circuit City's closing price Monday of $14.23.
Regulatory filings show that the private investment firm holds 15.3 million Circuit City shares.
With little debt and more than $750 million in cash, Circuit City has been considered ripe for takeover. The company turned down a bid of $8 per share from Mexican tycoon Carlos Slim in June 2003.
Highfields officials did not return a call seeking comment.