CHICAGO (Reuters) -
Circuit City Stores Inc. Wednesday said it would close 19 superstores, five regional offices and a distribution center by the end of the month, a day after the struggling electronics retailer received a $3.25 billion takeover offer.
The company also said one of its planes crashed in Colorado, killing all eight people aboard. The twin-engine jet crashed three miles outside Pueblo, Colo. Circuit City said four of the eight passengers were employees and that no company officers were aboard.
The company, which on Tuesday said it had received an unsolicited buyout offer from private investment firm Highfields Capital Management LP, has been has losing market share to bigger rival Best Buy Co. (down $0.31 to $54.78, Research) for several years and has been trying to improve its distribution system and revamp its stores.
Joseph Beaulieu, an analyst at Morningstar, said in a research note that at an offer price of $17 per share, Circuit City shareholders would be getting a very good deal given the company's poor performance in comparison to Best Buy.
In addition to the chain's weak competitive position, Beaulieu cited poor sales growth and inefficient use of capital (see correction).
The 19 stores to be closed had combined revenue of $170 million in 2004.
In the statement, the company said the closings were all located in areas it believed could "no longer support a Circuit City Superstore."
The company said it expects expenses of about $30 million after taxes related to the store and office closings, due to lease terminations, asset disposals, severance and other costs.
Richmond, Va.-based Circuit City also said it has sold one of the buildings at its corporate headquarters, resulting in a gain of $1.8 million and elimination of $12.6 million in long-term debt.
Shares of Circuit City (down $0.09 to $16.10, Research) fell about 2 percent in afternoon trade after surging 16.2 percent Tuesday on news of Highfields' offer. Investors remain watchful that a potential bidding war could erupt.
The locations of stores the company plans to close include Indiana, Illinois, Kansas, Michigan including one in Detroit, as well as Ohio, including one in Columbus, one in Houston, and stores in Tennessee, Virginia and Milwaukee.
-- Correction: An earlier version of this story erroneously stated that Mr. Beaulieu mentioned staffing concerns as a problem for the company in his report. CNN/Money regrets the error.