The Shack's New Buyback, Sign of No Acquirers (RSH, BBY)

RadioShack Corporation (NYSE: RSH)  has had a buyout premium for some time as reports had been out that buyers from Best Buy Company Inc. (NYSE: BBY) to private equity groups were interested in the stock.  The company just raised the amount under its authorization for share buybacks.  That sounds good and the stock was up initially on the headline data, but this just confirms that the company does not really expect an acquirer to emerge with a solid premium buyout offer.

The company’s board of directors raised the existing buyback plan from $290 million up to $500 million.  The only good news in the implications here is that its “has directed that a significant portion of the repurchase program commence as soon as practicable.”  It may make purchases under one or more accelerated repurchase programs from the open-market or negotiated purchases and the plan does not have an expiration date.

Julian Day noted, “After careful evaluation of the options available to the Company and capital requirements of our business going forward, the Board has concluded that it is now appropriate to devote a part of our significant cash holdings to an expanded share repurchase program.”

“After careful evaluation of the options” and “capital requirements of our business going forward” are not phrases that any real buyout is imminent.  Can it happen?  Sure.  The problem is that the whole way through the buyout rumors is that we heard of fewer and fewer interested parties.  Day also went on to talk about the company’s further growth opportunities and positioning the business well ahead.

RadioShack closed up 1.45% at $19.58 today.  The original after-hours indication was up 2%, but now we have shares indicated lower around the $19.45 level in the after-hours session.  The 52-week trading range is $14.22 to $24.00, although we’d note that this one ran from under $20.00 to the $24.00 high based around the hope of a buyout.  That buyout has kept RadioShack from performing as poorly in share price as Best Buy.

Keep in mind that The Shack’s market cap is only $2.46 billion as of the close.  If any group wanted to buy it, the deal would not be too costly.  It just seems as though no new buyers are there.   This will shrink the size of the float, but it also makes that $931 million cash from June 30 about $210 million less down the road.

JON C. OGG