CIRCUIT City Stores Inc, pressured by investor Mark Wattles to raise its stock price, put itself up for sale and opened its books to Blockbuster Inc and billionaire Carl Icahn to prepare for a possible offer.

The second-largest United States electronics retailer rose 5.8 percent in New York trading last Friday.

Blockbuster made an unsolicited bid of US$6 to US$8 a share for Circuit City in February, provided it could study the retailer's books. That would value Circuit City at US$1.35 billion, more than 50 percent higher than its market capitalization now, Bloomberg News said. Icahn said last Friday he'd purchase the company should Blockbuster fail to get financing. Circuit City hired Goldman, Sachs & Co to review its options.

"This is a significant development and makes it more likely that a deal will happen," Richard Hastings, an analyst with the Federation of Credit and Financial Professionals in South Plainfield, New Jersey, said in an interview. Circuit City, which lost money in the past two years as Best Buy Co and Wal-Mart Stores Inc lured customers away, has opened smaller stores and fired higher-paid employees to lower costs. Wattles, who owns 6.5 percent of the retailer, had sought to replace Chief Executive Officer Phil Schoonover and gain five seats on the board, arguing that management's strategy isn't working.

Wattles and Circuit City have agreed to include three of his nominees as part of a slate of directors to be elected at this year's annual meeting, the retailer said in a separate statement.

Blockbuster said in a separate statement that it was "pleased" with the decision. The world's largest movie-rental chain, which also lost money last year, has said it would combine electronics with movies and eliminate overlapping store locations.