Tandy Corporation, which operates the Radio Shack chain of electronics stores, has entered into an agreement to acquire Amerilink Corporation in a deal worth $75 million as part of its strategy to wire U.S. homes for connectivity.
Amerilink is a 500-person operation that constructs, installs, and maintains cabling systems for the transmission of video, voice, and data in homes throughout the U.S. Tandy said the deal will accelerate the deployment of DSL and cable modem sales in conjunction with Compaq computers, and other products such as digital satellite systems from RCA.
Tandy said it will swap its stock for all of Amerilink's common stock in a tax-free exchange. The deal is expected to close by August 1999 pending shareholder approval.
The acquisition is yet more evidence that companies are looking to build out their businesses to serve a market where video, audio, computing and communications technologies are converging into one digital stream.
The deal enables Tandy to not only install a fast Internet connection to consumers' homes, but wire the inside of the homes to let digital televisions, cable set-top boxes, computers, and handheld gadgets talk to each other as well as control household appliances.
"Radio Shack is striving to be the home connectivity store," said Kurt Scherf, an analyst with Parks Associates, a Dallas-based company focused on home networking market research. "What they are looking to do is become a retail kiosk for a lot of these products" by installing broadband connections into 5,000 stores to demonstrate high speed Internet access, then actually installing these hook-ups in homes, he said.
With the acquisition of Amerilink, Radio Shack may have "thrown the gauntlet down in terms of what [competitors] may be required to do to get these products into homes," Scherf said.
The in-home networking market, including data, entertainment, and structure wiring, could reach $4.4 billion by 2004, Scherf said.
Tandy already sells Compaq computers in its stores, which are fitted at the factory with DSL modems, and recently signed a deal to sell products from Thomson Consumer Electronics, makers of the RCA and ProScan brand products.