Would Best Buy Acquire RadioShack?

The New York Post reports that RadioShack could put itself up for sale and one potential buyer could be Best Buy. The reason Best Buy might show interest is because it has tested smaller stores and wants to make bigger waves in the wireless and handheld business, the paper asserts.

Other options for RadioShack include finding another buyer, or using its $900 million in cash to take on a major share buyback or undertake its own large acquisition of another outfit. Some, however, are skeptical that anyone would purchase RadioShack.

One columnist, at 24/7 Wall St., says that a RadioShack deal is too expensive for most. With shares near $22, it would put the total purchase price above $3.5 billion, a deal that is likely too spendy for private equity players. Plus, its net income is too low.

But back to Best Buy. Would such a deal make sense for it? At the very least, we doubt that Best Buy has a need to add a network of 4,500 stores.

ALSO: Fred’s: A Discounter at the Back of the Pack

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1 Response to “Would Best Buy Acquire RadioShack?”


  1. 1 Chris Finley March 26, 2010 at 7:06 am

    They shouldn’t – but they should keep Radio Shack in their peripheral vision. Best Buy has a great deal of leverage on landlords in the current market since there are now are few players left in the big-box electronics space. Best Buy has to content with the likes of Wal-mart and Target competitively so it should – in theory – stick with its game plan and program. There may be a better time to acquire plum Radio Shack locations if the chain goes into deep discount itself – read hhgregg acquisition of many prime Circuit City locations. Radio Shack has a lot of locations – +4,400 stores in malls, strip centers and stand alone locations – but their operating margins are healthy for the moment and they seem viable for the near term. They have been in business for a long time and they are able to maintain stronger margins than Best Buy. But for Best Buy, I think the right decision is to stand pat and work through this economy with what you have in their current format and keep an eye on Radio Shack. It may be a good decision at some point, but the time is not now.


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