Clear Channel Communications, the largest US radio broadcaster, said last night that its board has rejected a revised offer by two equity firms that had agreed to buy the company, saying it wasn’t enough to win over shareholders poised to defeat a sale. The latest modified offer can well be translated as the last ditch attempt to bail out the deal from being voted down by shareholders next week, but now it seems clear that the buyout is almost certain to be rejected.
Clear Channel has said that the two companies, Bain Capital Partners and Thomas H. Lee Partners, had proposed increasing their bid from $39 a share to $39.20 and permitting shareholders to own a stake once the company becomes private. That would allow shareholders to take part in any profit from a sale or initial offering in several years. The buyout firms have actually offered shareholders up to 30 percent of the company after it became private.
Clear Channel’s board decided not to accept the new terms and structure, on the ground that the increase represented only 0.5 percent more than already offered. The board also noted that the change in the offer’s structure would necessitate delaying a special meeting scheduled for Tuesday for shareholders to vote on the existing proposal. So far there is no certainty the bid would be accepted by shareholders. The company has further said in its statement that the tabulated proxies received by the board of directors so far reflect that the votes against the merger exceed the one-third of outstanding shares required to defeat the proposal.
According to Texas law, the acquisition involves approval by two-thirds of shareholders. The main opposition block has been led by Fidelity Investments and Highfields Capital Management, with 15 percent of the shares. Investment advisers Institutional Investors Services and Glass Lewis & Co. have also opposed the buyout, saying the $39 price is too low.
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