Blockbuster came one step closer to acquiring the beleaguered electronic chain, Circuit City, Friday. Circuit City agreed to open its books to the video rental company after succumbing to pressure from one of its larger shareholders, Wattles Capital Management. Not only that, but should Blockbuster failed to secure financing to move the deal forward, Carl Icahn and/or his affiliates will step in and buy the electronic chain, given everything checked out.

Wattles asked shareholders back in April to elect five new directors to the City's board at the annual shareholders meeting in June, stating that "[without change to the existing board, we fear that the company's intrinsic value will continue to erode further."

Here's what Blockbuster had to say about this development:

"We are pleased to have reached an agreement with Circuit City to conduct due diligence and further explore a possible merger between our two companies. We continue to believe this combination would create significant cost and operating synergies therefore unlocking substantial value for our shareholders. While it is our hope that the due diligence process will reinforce both the strategic and financial rationale behind the deal, we are committed to only doing a transaction that provides substantial benefits for our shareholders."

So, should everything check out, Blockbuster is on its way in transforming itself into a company that will try to merge electronics and media. Read the previous coverage here.