Clear Channel Accepts Revised Buyout Bid

Clear Channel Communications' board of directors has accepted the revised version of a buyout offer from Thomas H. Lee Partners and Bain Capital worth $19.5 billion, the company announced Friday. The board, which had earlier rejected a bid of $39.00 a share, accepted the new offer of $39.20 after three big shareholders--Fidelity Investments, Highfields Capital Management, and California Public Employees' Retirement System--agreed to the price.

Before it can go forward, the deal must be formally approved by a majority of shareholders in a special, still unscheduled vote.

Originally, the vote was to take place at Clear Channel's annual meeting on May 22, but will now take place separately. The vote has already been delayed several times--repeatedly rescheduled by the company to allow more time for price negotiations after big shareholders rejected the private-equity firms' earlier bids. Fidelity Investments and Highfields were supported in their earlier refusals by Institutional Shareholder Services, a proxy advisory firm for large organizations that hold stock in other companies.

The successful sale of the company would take it private and end a rocky relationship with Wall Street. Although Clear Channel Radio consistently outperforms other radio companies in terms of revenue growth, the stock price has stagnated, causing investors to demand steps to increase value. After selling Clear Channel Entertainment, its concert and event business, in 2006, the company began a limited divestment of less lucrative assets, including the sale of 448 radio stations in smaller markets and its TV stations.

Clear Channel Outdoor, enjoying strong revenue growth, remains a good candidate for spinoff regardless of the success of the private-equity deal, according to industry observers, including Bear Stearns analyst Victor Miller. In April, Miller said if the deal falls through the company will likely sell the outdoor business and focus on its core radio properties. If the deal succeeds, the private-equity companies may also choose to sell the outdoor business.

Clear Channel Outdoor would have plenty of takers: international competitors JC Decaux, based in France, and Cemusa, a subsidiary of a Spanish construction firm, have both expressed interest in buying the company.

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