RadioShack is looking to shack up with a deep-pocketed investor.
The Texas-based electronics chain is exploring strategic alternatives including a possible sale of the company that could fetch more than $3 billion, sources told The Post.
Investment bankers have already begun pitching their private-equity clients about a leveraged buyout of RadioShack, notifying them of the retailer’s willingness to sell, according to people close to the situation.
Another possibility is a merger with big-box rival Best Buy, which lately has experimented with a smaller retail format to meet fast-growing demand for smartphones and other wireless gadgets.
“This is all about handheld devices,” said one banking source close to the situation. “A whole new wave of these products are coming out and they’re going to break the monopoly of the carriers,” whose market power has bruised RadioShack’s profits in the past.
A RadioShack spokesman declined to comment. Best Buy officials didn’t immediately respond to a request for comment.
JPMorgan Chase appears poised to lead the sales process for RadioShack, according to one source briefed on the situation.
Still, “it is very, very early” in the process, and any auction wouldn’t likely begin for weeks or even months, said the source.
Indeed, other options for RadioShack include using its $900 million cash hoard to either initiate a “massive share buyback,” in the words of one Wall Street banker, or even make a strategic acquisition of its own.
After years of recession-driven cost cutting that included thousands of layoffs, RadioShack CEO Julian Day lately has been pitching the company as a growth story.
But “they’ve reached a point where they can’t just keep building RadioShack stores,” according to one banker, who suggested an e-commerce acquisition could help bolster the retailer’s customer relationships.
Chatter earlier this month that RadioShack was primping itself for a sale was greeted with skepticism by some analysts. Last week, Goldman Sachs removed RadioShack shares from its “conviction buy” list, saying the retailer’s “valuation and capital structure are such that operating improvement beyond our forecast would be necessary to drive a successful LBO.”
And while billionaire Leon Black’s Apollo Global Management has been rumored to be a suitor to RadioShack, a person close to the situation said the buyout shop is not in talks with the retailer.
But despite a recent run-up in the company’s shares, some bankers say RadioShack’s fat margins and solid cash flow could help finance a healthy takeout premium to the current market capitalization of $2.7 billion.
RadioShack shares fell 29 cents to $21.80.
“I think it is a name that always intrigues people, but no one is very hot for it,” one Wall Street banker admitted. Still, he added that a buyout of RadioShack is a deal that “can get financed.” josh.kosman@nypost.com