According to the terms of the deal, the investment funds represented by Highfields will be able to retain a stake in Clear Channel, while exchanging part of their stock for cash--a mixed transaction that modifies the original all-cash deal. They may also elect to sell all their stock. Highfields' senior managing director, Jonathon S. Jacobson, said these terms "give public shareholders a continued opportunity to share in Clear Channel's future, while preserving the all-cash option that was contemplated by the original Merger Agreement."
The proposed sale to private-equity firms Bain Capital Partners and Thomas H. Lee Partners ran into opposition shortly after the terms of the deal were first announced in November 2006, with big shareholders like Highfields, Fidelity Investments and Calpers, the California Public Employees' Retirement System, rejecting the initial offer of $37.60 as too low.
These dissenters were supported by Institutional Shareholders' Services, an important proxy-advisory firm. Together, they forced Clear Channel to delay its annual shareholder meeting several times while it tried to hammer out a deal acceptable to both sides. Under the recently agreed-upon terms, the private-equity firms will pay $39.20 a share, representing a 2% premium over the current price of $38.43 and 19% over the 52-week median price of $32.79.
Clear Channel's annual meeting took place on Tuesday. Because of the repeated delays, however, the vote on the proposed sale will take place at a separate, still unscheduled meeting.