Clear Channel has faced dissent not only from private shareholders but major players like the Institutional Investors' Service, a consulting group that advises large organizations with substantial stakes in other companies. Opposition from these groups forced the company to delay the shareholder meeting; Clear Channel needed time to drum up more support and encourage the private-equity firms to raise their bid.
The original price of $37.60 a share represented an 18% premium over the average market price of the last six months. After the deal was announced in November 2006, shareholders seemed prepared to hold onto their stock and take their chances with the company. Clear Channel Radio outperformed the market in terms of revenue growth in 2006, and Clear Channel Outdoor is leading the general resurgence of the out-of-home market.
In addition, Banc of America analyst Jonathan Jacoby noted a "greater willingness on the part of institutional investors to take many of the steps that private equity consortia do to "squeeze" value out of companies."
Among the groups that tripped up the first attempt are Fidelity Management and Research, the company's biggest shareholder, Highfields Capital Management LP and the California Public Employees' Retirement System, which threw in its lot with the dissenters on Monday. If the proposed deal fails, Bear Stearns analyst Victor Miller predicts a selloff of the company's properties, turning it into a pure-play radio company. Its 400 small-market radio stations and TV station group, already on the block, would be followed by the sale of the international and domestic outdoor companies.