Clear Channel Buyout Finally Approved

After ten months of tortuous negotiations, Clear Channel Communications shareholders voted to approve the $19.5 billion buyout of the media giant by private equity in a special meeting on Tuesday. The deal will yield a controlling stake of at least 70% to the private equity firms, with up to 30% of the company's stock remaining in the hands of private shareholders.

Thomas H. Lee Partners and Bain Capital Partners, LLC, the two private-equity firms, purchased the stock at $39.20, representing a roughly 30% premium over the average share price of $30 during the 12-month period before October 2006, when the deal was first proposed.

During the last 10 months, Clear Channel faced entrenched opposition from larger shareholders that felt the premium was too small. These earlier rejections forced the private-equity firms to raise the price repeatedly from an initial bid of $37.60.

The recent instability in the stock market may also have spurred shareholders to vote in favor of the deal. If it had failed, most analysts predicted the stock, trading at around $37.50, would slide closer to its original price of $30 before the proposed buyout was publicized.



Last week, for example, Institutional Shareholders Services, a big investment proxy advisor serving corporate stock owners, finally endorsed the deal after months of opposition. ISS was the last big holdout, joining earlier converts like Highfields Capital Management, Fidelity Investments and Calpers, the California Public Employees' Retirement System.

Independently of the buyout deal, Clear Channel Radio is proceeding with its sale of about 450 small and mid-size market stations to a variety of buyers. This strategic move will shed less valuable assets and focus the business on its most profitable stations.

The company also sold its 56-station television group to Providence Equity Partners for about $1.1 billion in net proceeds. Finally, some Wall Street analysts speculate that once the buyout is concluded, parent company Clear Channel Communications will spin off its profitable Outdoor division.

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