Where Do You Go to Buy Your Gadgets? Soon It May Be Difficult to Tell
Staples plans to buy out a major brick-and-mortar competitor, Office Depot, in a deal expected to be worth around $6 billion. But the technology and appliance retail landscape may further mutate this year, if Amazon gets its way with RadioShack.
In the deal, which was unanimously approved by the boards of directors of both companies, Office Depot shareholders are expected to receive a little over a fifth of a share in Staples and $7.25 in cash per share. That's a value totaling about $11 per share, which is well over Office Depot's current worth to its investors.
According to USA Today, the combined office supply retail company would have sales of about $39 billion, bolstering its position in what Ron Sargent, CEO of Staples, called "a rapidly evolving competitive environment."
Rapidly Evolving, Indeed: Will Some RadioShacks Turn Into Amazon?
The proposed acquisition comes at a time when retailers in that market are feeling the squeeze from successful online and hybrid alternatives like Best Buy, Wal-Mart and particularly Amazon -- which, ironically, is reportedly mulling its own plans for expansion into the physical retail space.
According to a Bloomberg report earlier this week, Amazon is in talks to enter the physical storefront retail business by acquiring some locations from the similarly struggling retail chain, RadioShack.
Citing unnamed sources, the report details plans by Amazon to use some locations it would acquire from the once dominant (and now nearly bankrupt) RadioShack -- which began closing thousands of its stores across the country last year in an attempt to pull out of its death spiral.
That attempt was probably in vain, since RadioShack has lost about 90 percent of its stock value over the past year, with the New York Stock Exchange suspending RadioShack on Monday after its value had consistently underperformed to the point where it was actually breaking the NYSE's rules. When all else fails, RadioShack's selling its real estate to the online giant that's largely behind its decline may be the only option left.
Amazon reportedly would use its crippled rival's retail locations as showrooms for its hardware, such as the Kindle Fire tablet line and Fire Phone (both of which have had major struggles finding and maintaining consumer appeal). Physical Amazon stores may also be used as a local pickup and drop-off point for customers shopping online, similar to Best Buy and Wal-Mart's successful and expanding hybrid model.
Sprint: RadioShack's Other Option
The talks between Amazon and RadioShack may never lead to a deal, though, and once mighty "shack" may have a different lifeline in the form of Sprint, whose new CEO Marcelo Claure has expressed interest in expanding its own physical retail operations, possibly within RadioShack locations.
Now with a consolidated threat in Staples/Office Depot -- a deal expected to close by the end of the year -- and few prospects for further bootstrapping itself out of debt, the ultimate question for RadioShack might be which company -- Amazon or Sprint -- it wants to allow to reanimate its corpse.
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