NEW YORK (CNN/Money) - With the merger and acquisition winds swirling around the banking, cable, software and wireless sectors, electronics retailer Circuit City took a step Thursday to possibly enter the fray.

The No. 2 electronics retailer behind Best Buy said its board of directors voted to terminate its shareholder rights plan, a measure typically used to make it dramatically more expensive for a company to be acquired.

Shares of Circuit City (CC: Research, Estimates) gained about 2 percent in late trading on the New York Stock Exchange.

The Richmond, VA.-based company has been through a deep restructuring as it tries to gain ground on Best Buy, and some shareholders may feel that the company is better off selling itself, according to David Campbell, retail analyst with Davenport & Co.

"Some may think if they can't grow the business, they should put it up for sale," he said.

Indeed, Circuit City said in a statement Thursday that it felt some shareholder pressure and "determined that terminating the plan was appropriate and responsive to shareholder votes on this issue."

When asked why shareholders would want to see the plan, sometimes called a "poison pill" terminated, Circuit City spokesman Bill Cimino said "they believe eliminating the plan will increase shareholder value," which he noted could include a buyout.

However, he said the company did not comment on merger possibilities.

Other companies, including Pfizer (PFE: Research, Estimates), have recently eliminated their poison pills in the name of greater corporate governance.

"Shareholders don't like poison pills, because they help entrench management and allow management to reject lucrative acquisition offers," said Bill Armstrong, retail analyst with C.L. King & Associates.

Pfizer's $286.5 billion market capitalization prohibits a bid for the world's largest drugmaker, but Circuit City's $2.3 billion market cap has some wondering if the retailer is a target.

"I'm not sure what prompted the move, but it certainly removes a barrier [to a buyout]," added Armstrong.

Recent unsolicited bids include Comcast's bid for Disney, Oracle's offer to buy PeopleSoft and Sanofi-Synthelabo's move to acquire Aventis.

Circuit City's Cimino said the poison pill did not prohibit the board from considering offers to buy the company, and it is the board's duty to consider such options.

But the poison pill also allowed the board to reject hostile takeovers by flooding the market with stock existing shareholders can buy at a discount. Removing the poison pill now opens the company to friendly and hostile takeovers.

Circuit City has been approached by would-be acquirers before. Last June, the company rebuffed an offer from Mexico's richest man, Carlos Slim Helu, to buy the remaining shares of the company he did not already own for $8 a share.

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Since then, speculation has surfaced that Sears Roebuck and another individual financier may be interested in the company. A Sears spokesman said Thursday the company does not comment on rumors.

"A fair number of investors would like to see a sale," said Gerry Van Horn, portfolio manager of the Stratton Small-Cap Value fund, which owns a stake in Circuit City. "If they came out and said they're selling for $15 a share, we'd be excited too."  

--C.L. King's Armstrong owns shares of Circuit City.