ATLANTA (Reuters) - Circuit City Stores Inc
Blockbuster shares were up more than 13 percent.
"We didn't believe that such a debt-laden marriage made sense and questioned the potential synergies that Blockbuster believed might have existed," Soleil Securities analyst Scott Tilghman, who follows Circuit City, said in a research note.
Tilghman cited a possibility that the two companies could explore cross-selling of products and services.
But he also cited concern that Wattles Capital Management, which holds about a 6.5 percent stake in Circuit City, and another investor could sell their shares. Circuit City's stock has fallen to levels not seen in about two decades since the company posted a first-quarter loss and suspended its dividend last month.
"The usual summer doldrums combined with incessant economic headwinds are also likely to challenge Circuit City shares until the usual back-to-school pick-up begins," Tilghman added.
Circuit City shares were down 38 cents, or 15 percent, at $2.17 on the New York Stock Exchange, while Blockbuster was up 35 cents, or 13.9 percent, at $2.86.
(Reporting by Karen Jacobs, editing by Maureen Bavdek)