AMZN To Acquire RadioShack: Now this makes more sense. Throughout 2013 there has been ongoing conversation among bloggers regarding whether or not an AMZN acquisition of RSH makes sense. Others have suggested AMZN engaging in a partnership with RSH to utilize RSH's space for AMZN's Locker and or, same-day delivery (They did partner with RSH for Locker until RSH gave them the boot). RSH with an enterprise value of ~$500 million wouldn't hurt much of AMZN's $8 billion cash pile, making it much more of a financially feasible deal. Furthermore, there's talk that AMZN may not be the only company eyeing RSH as a potential acquisition target. It has been suggested that Google (GOOG) could likewise benefit from acquiring RSH. But would the ailing retailer want to be acquired? In a word, yes, but a story always makes the point stronger.
A little more than a week ago I went into a RSH near closing time with an RSH coupon. As I arrived at RSH I saw what I normally see at a RSH - a store with a couple employees, but no customers. After I did my shopping and as the employees began to close up the store, I asked abruptly "So is RadioShack going to stick around much longer?" Both employees replied they didn't know, but that they were concerned. In fact, one of the two employees said this verbatim quote: "We receive those updates from the CEO and they always say 'We're good, we have enough money,' but I don't know if it's true because man, things are bad!" I chuckled a bit as they did as well, but sadly, they seemed worried that RSH's demise would be their job's demise as well. One employee then said they had heard inter-company rumors (which are somewhat public now) that RSH was hoping AMZN would acquire them.
So does this potential acquisition make sense? As I reviewed other transactions in the past I realized like any there are some pros and cons. Structuring a deal to acquire RSH would be undoubtedly in AMZN's favor. RSH has lost over 80% of its value in roughly a mere three years time and is worth just north of $300 million on the market. AMZN could offer RSH an all stock transaction with a 50% premium and it would still wouldn't tremendously hurt AMZN (but they obviously wouldn't offer this). At this, RSH shareholders would utter the loudest "Hallelujah!" the street has ever heard if this happened as they have been left holding the bag for the longest of time with seemingly no light at the end of the tunnel.
One thing I like about AMZN acquiring RSH is that it would give AMZN an opportunity to sell off several of RSH's some 7,000 properties worldwide, many of which are in terribly unprofitable locations, allow AMZN into new overseas markets, acquire a historically known brand name (collecting goodwill in the process), and then have a presence in more localized areas which goes beyond renting a vendor's space within a mall as BBBY does. Financially this makes sense for AMZN and it would come with some perks. But RSH buildings are quite small compared to other retailers. AMZN would need to utilize RSH's buildings strategically either for same-day distributing sites or to offer some sort of customer servicing provision like AAPL's Genius Bar or BBY's Geek Squad. AMZN currently offers Amazon Locker locations wherein a customer can pick up an item. RSH's buildings seem applicable to fill this same utility and then offer customer servicing on products which typically require it (e.g., higher margin items such as consumer electronics). Often times a consumer buys a camera or new smartphone and wants to be shown and taught how to use it formally as opposed to reading about it, playing around with it, or simply watching a video on YouTube. It's the simple psychology here of societal interaction which is what AMZN cannot replicate yet and could eventually hurt its business.
AMZN To Acquire RadioShack: Now this makes more sense.
I hope it would not affect the franchise stores, such as exist in a small town like mine. Although ours is probably no busier than the corporate stores, it seems to hang on and does serve an important source of parts in the community. It would be sorely missed if liquidated.
I hope it would not affect the franchise stores, such as exist in a small town like mine. Although ours is probably no busier than the corporate stores, it seems to hang on and does serve an important source of parts in the community. It would be sorely missed if liquidated.
-Phil
Be sure to read the stuff at the link I supplied.
The snip I posted is from that link...which is just wishful thinking by the writer at this time.
Comments
http://seekingalpha.com/article/1913501-is-amazon-lacking-a-local-presence-a-merger-or-acquisition-could-create-value?source=yahoo
AMZN To Acquire RadioShack: Now this makes more sense. Throughout 2013 there has been ongoing conversation among bloggers regarding whether or not an AMZN acquisition of RSH makes sense. Others have suggested AMZN engaging in a partnership with RSH to utilize RSH's space for AMZN's Locker and or, same-day delivery (They did partner with RSH for Locker until RSH gave them the boot). RSH with an enterprise value of ~$500 million wouldn't hurt much of AMZN's $8 billion cash pile, making it much more of a financially feasible deal. Furthermore, there's talk that AMZN may not be the only company eyeing RSH as a potential acquisition target. It has been suggested that Google (GOOG) could likewise benefit from acquiring RSH. But would the ailing retailer want to be acquired? In a word, yes, but a story always makes the point stronger.
A little more than a week ago I went into a RSH near closing time with an RSH coupon. As I arrived at RSH I saw what I normally see at a RSH - a store with a couple employees, but no customers. After I did my shopping and as the employees began to close up the store, I asked abruptly "So is RadioShack going to stick around much longer?" Both employees replied they didn't know, but that they were concerned. In fact, one of the two employees said this verbatim quote: "We receive those updates from the CEO and they always say 'We're good, we have enough money,' but I don't know if it's true because man, things are bad!" I chuckled a bit as they did as well, but sadly, they seemed worried that RSH's demise would be their job's demise as well. One employee then said they had heard inter-company rumors (which are somewhat public now) that RSH was hoping AMZN would acquire them.
So does this potential acquisition make sense? As I reviewed other transactions in the past I realized like any there are some pros and cons. Structuring a deal to acquire RSH would be undoubtedly in AMZN's favor. RSH has lost over 80% of its value in roughly a mere three years time and is worth just north of $300 million on the market. AMZN could offer RSH an all stock transaction with a 50% premium and it would still wouldn't tremendously hurt AMZN (but they obviously wouldn't offer this). At this, RSH shareholders would utter the loudest "Hallelujah!" the street has ever heard if this happened as they have been left holding the bag for the longest of time with seemingly no light at the end of the tunnel.
One thing I like about AMZN acquiring RSH is that it would give AMZN an opportunity to sell off several of RSH's some 7,000 properties worldwide, many of which are in terribly unprofitable locations, allow AMZN into new overseas markets, acquire a historically known brand name (collecting goodwill in the process), and then have a presence in more localized areas which goes beyond renting a vendor's space within a mall as BBBY does. Financially this makes sense for AMZN and it would come with some perks. But RSH buildings are quite small compared to other retailers. AMZN would need to utilize RSH's buildings strategically either for same-day distributing sites or to offer some sort of customer servicing provision like AAPL's Genius Bar or BBY's Geek Squad. AMZN currently offers Amazon Locker locations wherein a customer can pick up an item. RSH's buildings seem applicable to fill this same utility and then offer customer servicing on products which typically require it (e.g., higher margin items such as consumer electronics). Often times a consumer buys a camera or new smartphone and wants to be shown and taught how to use it formally as opposed to reading about it, playing around with it, or simply watching a video on YouTube. It's the simple psychology here of societal interaction which is what AMZN cannot replicate yet and could eventually hurt its business.
Jim, what's the price? If it's still the clearance price I am still interested. Please PM me on this (the details) and we can figure something out.
-Phil
Be sure to read the stuff at the link I supplied.
The snip I posted is from that link...which is just wishful thinking by the writer at this time.