April 14 (Bloomberg) — Blockbuster Inc., the biggest movie-rental chain, made an unsolicited offer to buy Circuit City Stores Inc., for as much as $1.35 billion as the second- largest U.S. electronics retailer struggles with falling sales.

Blockbuster, based in Dallas, wrote to Circuit City Chief Executive Officer Philip Schoonover and bid between $6 and $8 a share for the company, as much as double last week’s closing price. Circuit City, which rose as much as 47 percent in New York Stock Exchange composite trading, said in a statement it isn’t convinced Blockbuster can finance a purchase.

The offer comes six weeks after Circuit City investor Mark Wattles said he wanted Schoonover ousted and a buyer found. The company posted five quarterly losses before returning to profit in the fourth quarter by firing higher-paid workers. Blockbuster CEO Jim Keyes said today that a merger would save money and combine expertise in media content and electronic devices.

“It’s an odd move,'’ Nick Bubb, a retail analyst at Pali International in London, said in a telephone interview. “Synergies between a video store and an electronics store aren’t that obvious.'’

The video chain has the support of its second-biggest investor, billionaire Carl Icahn, Keyes said today on conference call with investors and analysts.

Financing Questioned

“To date Blockbuster has been unable to satisfy Circuit City and its advisers that Blockbuster’s proposal could be financed,'’ Circuit City said in the statement. Blockbuster said Richmond, Virginia-based Circuit City hasn’t given access to its books.

“The combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices,'’ Blockbuster said in its statement.

Circuit City has 693 stores in the U.S. and 779 shops and dealer outlets in Canada. Schoonover has opened smaller stores and reduced staff as same-store sales decline and it loses clients to Best Buy Co., the biggest electronics chain. Revenue and earnings are suffering because new employees are struggling to sell service packages and warranties, among the most profitable items electronics retailers offer.

“Clearly Circuit City itself is in pretty poor shape,'’ Pali’s Bubb said. Blockbuster is in “a much stronger position.'’

Circuit City soared $1.40, or 36 percent, to $5.30 at 9:42 a.m. in New York trading. The shares tumbled 79 percent in the 12 months through last week. Blockbuster declined 33 cents, or 11 percent, to $2.80.

Blockbuster Online

Before 2007, Blockbuster lost money in nine of the past 10 years as people switched from renting videos at stores. Blockbuster is cutting marketing costs and shedding unprofitable customers to return to profit. It’s also sold more DVDs and raised prices on its Total Access online plan, designed to compete with Netflix Inc. in Internet rentals.

“At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content,'’ Keyes said in the statement. “These strategic initiatives have already improved our financial results.'’

Blockbuster also forecast net income of $30 million in the first quarter, today’s statement shows. That compares to a $49 million loss in the same period last year.

`Timely Commencement’

The video-rental company made the proposal public as it “believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company,'’ it said in the statement. “As Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process.'’

Keyes said he hasn’t yet spoken with Wattles.

Wattles, who holds a 6.5 percent stake in Circuit City, said in a Bloomberg Television interview last week that he planned to meet with electronics retailer’s lead director, Mikael Salovaara, on April 11. Wattles founded the Hollywood Video chain and sold it in 2005. He bought retailer Ultimate Electronics Inc. at a bankruptcy auction that year.