Clear Channel Communications has decided to delay the vote on its $18.7 billion sale by two private equity groups and consequently provided the largest US radio station chain an extra month to convince doubtful investors to support the contentious deal. Clear Channel has rearranged its shareholder meeting regarding the company’s proposed privatization, in order to improve chances of winning shareholder approval. According to Texas law, the company needs two-thirds of all shares to be voted in its favor to win the privatization, and any shareholder who doesn’t vote in favor will be considered as a vote against the privatization.
In its official statement Clear Channel informed that the vote has been moved to April 19 from March 21. San Antonio based company had decided in November last year to sell itself to the private equity firms Thomas H. Lee Partners and Bain Capital Partners for $37.60 a share. The company has strategically taken the decision to delay the vote as part of an effort to save the deal after opposition to the sale escalated. Many shareholders consider that the offered price was too low.
In case if investors discard the deal, it would correspond to the most high-profile private equity deal in the existing cycle not to close, and it may symbolize increased opposition to buy-outs by investors. Some experts have expressed less chances of the deal’s success since many shareholders believe the company is worth more than the $37.60 a share offered.
Recently, an advisory firm to institutional shareholders, Glass Lewis, had recommended investors to vote against Clear Channel’s pending $19 billion buyout, suggesting the company has better alternatives to boost shareholder value. In its recommendation, the firm also agreed with investors who felt the transaction value is too low. However, another firm, Proxy Governance, had recently recommended Clear Channel shareholders to endorse the buyout, but extended that the company should try to negotiate a higher price.
