$18.7 Billion Private Buyout Of Clear Channel Announced
It only took Clear Channel three weeks to accept the third-largest buyout offer ever in the U.S., after announcing in late October that it was considering “strategic alternatives.” The nation’s biggest radio station operator agreed to an $18.7 billion offer from Thomas H. Lee Partners LLC and Bain Capital Partners LLC. Clear Channel owns or operates 1,150 radio stations and is the largest operator of radio stations in the country.
In addition to paying $37.60 in cash for each Clear Channel share, the buyers will assume an additional $8 billion in debt. Chief Executive Mark Mays said the time was right to take the company private because its stock was being undervalued by equity markets.
The transaction would be one of the biggest deals to take a company private, excluding debt, and illustrated the vast sums that buyout specialists have been able to assemble to acquire public companies. San Antonio-based Clear Channel’s shares jumped $1.24, or 3.6 percent, to close at $35.36 on the New York Stock Exchange Thursday after rising earlier to a new 52-week high of $35.88. The company has until Dec. 7 to solicit competing proposals. Another bid for Clear Channel had been expected from Providence Equity Partners, the Blackstone Group and Kohlberg Kravis Roberts & Co.
So what’s next for Clear Channel Outdoor, a major operator of billboard and bus-stop ads? Clear Channel owns a majority of the outdoor business, which trades separately. Outdoor advertising company JCDecaux last week expressed interest in acquiring Clear Channel Outdoor. Thursday’s announcement doesn’t include any provisions for taking the public portion of Clear Channel Outdoor private, the company said. However, Clear Channel’s majority ownership of Clear Channel Outdoor will transfer to the private equity group.
Once stock market darlings, radio stocks have fallen out of favor on Wall Street in recent years amid sluggish advertising revenues and competition from the boom in portable listening devices like Apple Computer Inc.’s iPods and the emerging growth of satellite radio. Since January of 2000, Clear Channel stock has fallen from a high of more than $90.
Clear Channel has instituted several measures to try to win listeners back, including cutting back on the number of commercials. However other operators have yet to embrace its “less is more” strategy. Clear Channel was founded in 1972 and benefited greatly from the loosening of media ownership rules, which allowed more radio stations to be held by a single owner in each market.