Blockbuster today turned hostile on US electrical group Circuit City which it first approached two months ago with an indicative offer valued at $1.3 billion.

America's largest film rental chain, with ambitions to diversify, wrote to Philip Schoonover, chairman and chief executive of the second largest US electrical retailer on February 17, outlining an offer of between $6 and $8 a share.

However, Circuit City has so far refused to allow Blockbuster to conduct due diligence on the company, and the movie rental group will now approach shareholders in a bid to force Circuit City to open its books.

Blockbuster said today: "Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."

Jim Keyes, the former chief executive of 7-Eleven, the convenience store giant, was appointed Blockbuster's chairman and chief executive in July last year to revitalise the chain's business as competition grew from the likes of Amazon.com for DVD sales and rental.

In August, it acquired Movelink, an online film download services, to increase its presence on the internet.

Mr Keyes replaced John Antioco after the US activist shareholder, Carl Icahn, challenged him over the direction of the business and his $51.6 million pay packet.

Mr Icahn has since succeeded in ousting Motorola's chief executive, Ed Zander, from the company and pushing the board to accept a number of demands that he hopes will lead the world's third largest mobile phone marker to a recovery.

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