Clear Channel Communications Inc.’s directors have approved a revised $19.5 billion take over bid from two private equity firms after two big shareholders suggested support for the offer. The offer from Thomas H. Lee Partners LP and Bain Capital LLC of $39.20 a share, 20 cents higher than a previously rejected bid, was collectively accepted by Clear Channel’s board, the San Antonio-based company said in its statement. The agreement with Clear Channel’s largest shareholders put an end to a six-month struggle over the fate of the largest US radio broadcaster and its founding Mays family. Fidelity Investments and Highfields Capital Management, owners of 14 percent of the shares, have supported the sweetened offer, fourth time the private equity duo have made, after outside shareholders were given an option to keep equity in the company.
Shareholders would be given the option of holding up to 30 percent of the corporation’s outstanding capital stock, constituting around 30.6 million shares, with an estimated value of about $1.2 billion. At the same time, no shareholder would be allowed to hold more than 9.9 percent of the firm’s outstanding capital stock. Many big shareholders including CalPERS, Highfields and Fidelity Management & Research, Clear Channel’s largest shareholder with 9.8 percent of shares outstanding, had earlier protested against previous bids, on the ground that they did not represent appropriate shareholder value.
In fact, early this month, initial shareholder vote has reflected sufficient resistance to derail a once-sweetened $39 per share offer. According to Texas law, at least two-thirds of Clear Channel’s shareholders would be required to vote for the deal for it to be finally approved. However, Bain and Lee’s latest offer is somewhat similar to one Clear Channel’s board rejected two weeks back. That bid would have enhanced payments to most shareholders from $39 to $39.20 per share by lessening payments to the company’s board to $37.60 per share. In addition, it also would have given shareholders the choice between cash or stock in a private Clear Channel. Interestingly, unlike the previous offers, the latest one was drawn up with guidance by several shareholders.
Clear Channel in its statement said that it would reschedule a vote on the deal, originally planned for a special meeting on May 22. The company will in its place set a new record date and a new vote, which will in all probability take place within the next three months, pending the filing of amended registration materials with federal regulators.
