U.S. News

Clear Channel May Strike Revised Buyout Deal, Source Says


Radio operator Clear Channel Communications could announce within the next few days that a revised buyout proposal has been agreed upon, as shareholder support for a $19.6 billion offer increases, a source familiar with the situation said.

The situation is still uncertain however, with a deal yet to be finalized and a shareholder vote to overcome.

With a vote scheduled for May 22, Clear Channel is under shareholder pressure to postpone it in order to allow Bain Capital Partners and Thomas H. Lee Partners to raise their $19.5 billion bid by 20 cents a share to $39.20 a share.

The new proposal, put forward in recent weeks by the private equity firms, also gives current shareholders the option of taking a stake of up to 30% in the restructured company.

Clear Channel declined comment.

"The market is assuming that at some time in the next couple of days there will be a new deal signed," one shareholder who declined to be named said on Thursday.

That shareholder said they expected that Clear Channel was in the process of finalizing details to announce that the revised bid had been accepted by the Clear Channel board.

Shareholder support for the revised bid has been gathering momentum, the first source said. Significant shareholders including Fidelity and NWQ have told Clear Channel that they are supportive of the revised proposal, the source added.

Fidelity and NWQ did not immediately return calls seeking comment.

Another significant shareholder, Highfields, is also supportive, sources previously told Reuters. Highfields and Fidelity had previously opposed a lower bid by the two buyout firms.

A revised deal would be the latest twist in the battle for Clear Channel since it announced in October that it had hired Goldman Sachs to help it evaluate strategic alternatives.

That provoked interest from a number of private equity players. In November, Bain and T.H. Lee beat out a rival consortium including Providence Equity Partners, Blackstone Group and Kohlberg Kravis Roberts, to buy Clear Channel for $37.60 a share.

Bain and T.H. Lee's bid ran into trouble when a small number of large shareholders, and influential proxy advisory service ISS, said the bid undervalued the company.

Clear Channel originally rejected that $39.20 offer, arguing that its acceptance would delay the date of the meeting by up to 90 days, with no certainty the transaction would be approved by shareholders.

But shareholders pressured Clear Channel to reconsider its decision, with several stockholders previously telling Reuters they had called on the company's board to put the higher bid to a vote.

If the board agrees the revised bid, the vote would likely be delayed by up to 90 days, because a new proxy statement would have to be drawn up and circulated to shareholders and to the U.S. Securities and Exchange Commission, a source familiar with the situation previously told Reuters.

The deal faces a difficult hurdle because under Texas law, holders of at least two-thirds of a company's shares must approve the transaction. Shareholders who fail to vote are counted as voting against the deal.

Opposition from Fidelity and Highfields as well as from proxy advisory service ISS to the original deal had dealt a large blow to the prospect of getting it through a vote.