RadioShack auction draws private equity interest

Bidding is underway for electronics retailer RadioShack, according to a report in the New York Post, with a handful of investment and private-equity firms leading the action.

The report, which cited unnamed sources familiar with the matter, said Blackstone Group led the initial round of bids, which was completed last week. Also participating were Kohlberg Kravis Roberts & Co., Bain Capital and TPG.

Do those private equity firms sound familiar? That's because they are.  TPG was among a group of investment firms that purchased Alltel in 2007; Bain teamed with Huawei to purchase 3Com in 2007; and the Blackstone Group and Kohlberg Kravis Roberts & Co. were among those in 2009 that were interested in the assets Verizon Wireless (NYSE:VZ) divested as a condition of its $28.1 billion acquisition of Alltel. 

RadioShack hopes to complete its deal this summer, and is anticipating a transaction in the range of $20 per share, according to an unnamed source quoted by the New York Post. RadioShack's stock closed today at around $21 per share.

Interest in RadioShack hinges largely on the retailer's growing wireless business. Analysts have estimated that more than two-fifths of the company's sales come from wireless, according to a report in MarketWatch. Indeed, RadioShack recently augmented its smartphone lineup with the addition of Apple's (NASDAQ:AAPL) popular iPhone.

Further, in RadioShack's most recent quarter, wireless sales grew 49 percent due to stronger postpaid sales via Sprint Nextel (NYSE: S), as well as the introduction of T-Mobile USA service.

But RadioShack isn't the only electronics retailer hoping to cash in on Americans' seemingly bottomless appetite for smartphones. Rival Best Buy too is hoping to expand its standalone mobile store presence this year in a push to have up to 1,000 of the outlets across the United States.

For more:
- see this New York Post article
- see this MarketWatch article

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