J.C. Penney Company, Inc. (JCP), Wal-Mart Stores, Inc. (WMT): End Could Be Close for RadioShack Corporation (RSH)

Could the company be acquired?

But what about an acquisition? RadioShack’s retail stores could be attractive to a would-be acquirer, and companies like Best Buy or Amazon.com, Inc. (NASDAQ:AMZN) could be interested.

While that might be possible, the likelihood isn’t enough to prompt an investment in the company.

Wedbush’s Michael Pachter dismissed the notion of Best Buy buying RadioShack. He noted that while a smaller-store format would help Best Buy thrive, the retailer has (unfortunately) entered into long-term leases. For now, Best Buy is stuck in its big stores, and likely couldn’t afford to take on RadioShack Corporation (NYSE:RSH)’s operating expenses.

Amazon.com, Inc. (NASDAQ:AMZN)’s CEO Jeff Bezos has said he’d be interested in a retail operation, but only if his company had a new and interesting take on the idea. He told Charlie Rose that the market for physical retail stores is already pretty well served.

RadioShack’s real estate holdings are far from substantial. The company only owns two stores, though it does have thousands of leases. On its balance sheet it lists the total value of its plant, property and equipment at around $210 million, a mere fraction of its debts, which stand in excess of $700 million.

Investing in RadioShack

On a purely financial basis, RadioShack appears to be trading at a discount. Its book value per share stands at $5.08, nearly double the current share price.

However, RadioShack Corporation (NYSE:RSH) is facing an existential crisis. The company is attempting to salvage itself with an aggressive store remodeling, but its competitors aren’t standing still — Best Buy is undertaking its own turnaround plan, while AT&T is making a concentrated push to revamp its retail experience.

With a short float near 40%, any improvement in the company’s core business would likely trigger a strong price appreciation. Yet, that improvement appears unlikely.

As Pachter has said, this is one company that could be out of business in less than two years.

Sam Mattera owns shares of Best Buy. The Motley Fool owns shares of RadioShack.

Sam is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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