Finally a Buyer for RadioShack?

It looks like the closest thing we have to a RadioShack buyer is private-equity firm Blackstone Group, in a deal that could reach $3 billion, the New York Post reports. The article says that CEO Julian Day wants to accelerate the selling process and is making presentations to bidders this week, which could also include Kohlberg Kravis Roberts & Co., Bain Capital and TPG.

The firms are reportedly interested in the chain because of its growing mobile phone business. Rival Best Buy was said to show interest in RadioShack, but that retailer is already growing its own mobile offerings.

Blackstone’s former big retail acquisition was the purchase of crafts chain Michael’s Stores, which is posting strong sales and earnings of late.

A few years ago RadioShack’s model looked obsolete, but the chain posted quite a turnaround. Would its growing mobile business and thousands of store locations mean a strong payoff for investors?

1 Response to “Finally a Buyer for RadioShack?”

  1. 1 Walter Bialas June 1, 2010 at 7:43 am

    While I have always been a fan of Radio Shack given its extraordinary name recognition and its “almost everywhere” locations, the concept remains pressured. Few are tinkering with building and repairing electronics these days. And, even though we all shop Radio Shack when we have a battery need, the consumer electronics sector is very competitive as Radio Shack moves to carve a niche there. It is clear their number of stores gives them a good platform for mobile phone distribution, especially as consumers trade phones more rapidly with all the technology advances. The phone business, however, is very competitive these days, with margins that may be insufficient to rationalize the Shack’s typical store size and store costs – unless they can drive significant additional shopping from the phone visit, which seems a tough proposition.

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June 2010

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