SAN ANTONIO – Clear Channel Communications Inc. agreed Wednesday to a private equity group’s $19.35 billion offer – an almost 4 percent increase from the group’s previous bid that had met with strong shareholder opposition.
The offer of $39 per share plus the assumption of $8 billion in debt raises the price for the billboard and radio company by about $690 million. It came the day before a scheduled vote on a lower offer that was facing strong resistance from several large shareholders.
The new offer now faces a shareholder vote on May 8.
Some of the company’s largest shareholders, including Fidelity Management & Research, Highfields Capital Management LP and the California Public Employees Retirement System, said they would vote against the original offer of $37.60 per share. The opposing shareholders held a large enough stake that many believed the deal would fail at that price.
A person familiar with Highfields’ position, who asked to remain anonymous because the deal was at a sensitive stage, said the new offer doesn’t change the fund’s opposition to the deal and Highfield still intends to vote against it. Highfields holds about 5 percent of Clear Channel shares, making it the third-largest shareholder behind Fidelity and Clear Channel Chairman L. Lowry Mays.
The equity group, led by Bain Capital Partners LLC and Thomas H. Lee Partners LP, has insisted for months that the initial offer was the best they would make, but as the number of shareholders signaling they would oppose the deal grew, the equity partners made a higher offer.
Despite the new offer, Clear Channel shares slipped 23 cents to $36.49 in afternoon trading on the New York Stock Exchange, signaling that some investors are betting the new offer isn’t enough to overcome shareholder objections.
The push for the higher price comes despite a radio industry facing strong competition from new music formats, like MP3 players.
The Clear Channel board began shopping the company around last fall. It struggled to raise its stock price as the radio business fell out of favor with the public.
Few analysts believe the radio business will improve dramatically anytime soon, but some shareholders insisted the San Antonio-based company was worth more than the original equity offer because of its billboard business.
Clear Channel is the largest outdoor advertising company in the world with 973,000 billboards in more than 60 countries. Outdoor advertising is seeing strong growth as marketers shift their ad money to outdoor displays
Nearly 90 percent of the outdoor business is held by Clear Channel Communications; the other 10 percent trades as a separate stock, which will remain regardless of whether the equity buyout succeeds.
Clear Channel is selling nearly 450 radio stations in smaller markets and its television group, but even after those transactions are complete, Clear Channel will own 675 radio stations, most in the largest U.S. markets.