While many observers characterize a proposed merger between Blockbuster Inc., and Circuit City Stores Inc., as a case of loser + loser = big loser, a Citi Investment Research analyst thinks that Blockbuster Inc.'s proposed acquisition of Circuit City Stores Inc. may be a good fit.

Blockbuster, whose video rental business is losing market share to pay per view, is aggressively pushing its $1 billion takeover bid for Circuit City, a national electronics retailer buckling under intense competition and weak consumer spending. Blockbuster sees synergies in a combined chain that sells electronic gadgets and rents movies and games.

Tony Wible of Citi Investment Research said the potential deal could provide Blockbuster with increased revenue and cost savings. He estimates the transaction could lift the value of Blockbuster's stock, trading recently under $3 per share, to nearly $11. Wrote Wible: "We believe it is key to realize that a Blockbuster-owned Circuit City will likely look very different than today as Blockbuster integrates Circuit City stores into its restructuring plans," he wrote in a client note, reports the Associated Press.

Bacon’s bottom line: A Blockbuster-owned Circuit City will "look very different than today?" Blockbuster could generate significant "cost savings?" That doesn't bode well for our friends here in Richmond.