According to the Washingtonn Post US consumer electronic retailer Circuit City will open its books to Video Ezy partner Blockbuster and billionaire Carl Icahn in a step toward a possible sale of the company.

According to the Washingtonn Post US consumer electronic retailer Circuit City will open its books to Video Ezy partner sBlockbuster and billionaire Carl Icahn in a step toward a possible sale of the company.

The mass retailer who has struggled up against Best Buy recently hired Goldman Sachs to review its potential strategies, but Circuit City’s board is not pursuing a particular option, whether a sale or otherwise, said chief executive Philip J. Schoonover said the Post.

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In April, Blockbuster made an unsolicited cash bid to buy the struggling retailer for $6 to $8 per share, totaling as much as $1.35 billion, a deal that would have roughly doubled Blockbuster’s market value. Blockbuster envisioned merging the companies’ products to create multimedia and electronics stores. But Circuit City questioned whether the movie-rental chain could finance the deal.

In a letter dated April 24 and filed with the Securities and Exchange Commission yesterday, Icahn, Blockbuster’s largest shareholder, said that he would purchase Circuit City if Blockbuster could not secure funding or shareholder approval. Circuit City had asked for the written commitment before opening its books.

Schoonover cautioned against reading too much into the situation.

“Let me be clear that our decision to allow Blockbuster and Carl Icahn to conduct due diligence should not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company’s value or that it has settled upon a particular strategic course of action,” he said in a statement.

Circuit City’s shares jumped 28 cents, or 5.9 percent, to $5.07. Blockbuster’s stock fell 2 cents, to $2.66.

Recently, Circuit City has been fighting a number of battles.

During its previous fiscal year, which ended in February, it lost a record $319.9 million, which it blamed on the weakening economy. The company has been losing ground to Wal-Mart and Best Buy. And this year, it opened smaller, more intimate stores — dubbed The City — to halt its slide.

As it struggled, Mark Wattles, an activist investor who owns 6.5 percent of the outstanding shares, engaged Circuit City’s executives and board members in a heated proxy battle. He sent a letter telling the company to replace Schoonover and put itself on the block. Earlier this year, Wattles, who co-founded Hollywood Video, called for an overthrow of the board and nominated five replacements.

But yesterday the combatants reached a settlement. Circuit City agreed to include three of Wattles’s nominees in the slate of directors to be elected at the annual meeting in June. One of the nominees will become a member of the board’s executive committee.

For more see the Washington Post