Blockbuster's attempted takeover of Circuit City may have raised plenty of eyebrows, but it turns out that certain behind-the-scenes players at both companies have quite a history together.

Mark Wattles, an activist investor who has been agitating for change at Circuit City since taking a 6.5 percent stake in the company earlier this year, is no stranger to being a target of Blockbuster's roving eye.

Wattles founded Hollywood Entertainment, the second-largest video chain behind Blockbuster before it was sold to the smaller rival Movie Gallery in 2005. Before that deal was consummated, however, Blockbuster made its own higher bid for Hollywood Entertainment, which did not sit well with the antitrust regulators in Washington.

Wattles left the chief executive post at the video chain just days after Blockbuster's takeover attempt was made public in early 2005. He later teamed up with Blockbuster, offering to buy half of the Hollywood Video stores in order to help earn a green light from regulators for the Blockbuster deal.

It didn't work. Movie Gallery won its bid for Hollywood Entertainment, and the combined company is now in bankruptcy.

At the time of the takeover battle for his company, Wattles had what appeared to have been civil discussions with Carl Icahn, who was a major shareholder of both Hollywood Entertainment and Blockbuster. Icahn remains a major owner of Blockbuster shares, despite his furor over its failed takeover of Hollywood Entertainment, and Blockbuster said this morning that he supports its bid for Circuit City.

Icahn and Wattles are reportedly still chatty. Wattles told Bloomberg that Icahn told him that he was even willing to help the transaction financially if need be. "I view it as a very favorable transaction for shareholders relative to other opportunities,'' Wattles said of the Blockbuster and Icahn financing.

But the connections between Circuit City and Blockbuster don't stop there. Circuit City's largest shareholder today is a hedge fund called HBK Investments, which has a 9.2 percent stake. Although the fund has a history as an activist, it made it known that its investment in Circuit City, which was made last year, is a passive one.

The Dallas-based HBK, which was founded by former Merrill Lynch executive Harlan B. Korenvaes, should be more than pleased with today's 30 percent jump in Circuit City shares. It helps to make up for the loss it took earlier this year on its Blockbuster investment.

That's right, HBK once stood right alongside Icahn as the No. 1 shareholder of the video chain to Icahn's No. 2 stake. HBK's stake in Blockbuster was also a passive one and, ultimately, a very costly one.

The fund acquired its stake in Blockbuster in late 2004, when the stock traded for around $10 per share. It sold off enough of its stake to fall below the 5 percent ownership threshold required by the S.E.C. in January of this year, when a share was worth $3.28.

There's no word yet on what HBK thinks of Blockbuster's intention to buy Circuit City for $1 billion in cash. But considering that Blockbuster shares are down a whopping 17 percent today, it's safe to assume that Harlan B. Korenvaes is thankful he parted ways with Icahn at Blockbuster earlier this year.

Icahn's investment in Blockbuster is now down some 80 percent.
 
It's unclear just exactly how Blockbuster's unusual and unwelcome bid for Circuit City came about. But at least the major players have already made their introductions.