TPG Capital plans to opt out. The Blackstone Group, which had wanted to launch a joint bid with TPG, doesn’t want to make an offer by itself. Bain Capital has already bailed and Best Buy never got involved.
“This is a classic case of an investment banker [Goldman Sachs] getting a sale mandate, it not going well, and thus reaching as far as [they] can to resuscitate it,” says one banker.
So where to reach? Reuters reports that Advent International may still have interest, but is unlikely to bid alone. That means it may reach out to a semi-vulture PE shop like Sun Capital Partners, Platinum Equity and Golden Gate Capital. Goldman also could go back to mega-firms that already passed on The Shack’s $3 billion asking price (with $1 billion in equity)
The electronics retailer originally generated private equity interest, in part, because it’s sitting on $872 million in cash. In 2009, the retailer generated $461 million in EBITDA which is expected to go up to $500 million this year. RadioShack also has $660 million in long-term debt.
However, there is a strong likelihood that RadioShack won’t close on a PE deal, one private equity executive says. “One billion dollars is a big equity check in a business with lots of competition,” the source says. “There is a chance no one will get there.”