Clear Channel Board Rejects Another Better Offer...Again

[Cornflake the Destroyer]

The New York Times says the two players, Bain Capital Partners and Thomas H. Lee Partners, added another twenty cents to their offer, upping it to $39.20 a share

http://www.nytimes.com/2007/05/04/business/media/04clear.html?_r=1&oref=slogin

 

[SirRoxalot]

Fool Me Once...

So much for the "final offer". An interesting point is that the increased offer was based on paying the Mays family $37.60 a share - the original offer - while other shareholders got $39.20 a share. Shareholders were also offered a stake in the new company so they'd reap a portion of whatever profits might come from selling off assets.

I guess the shareholders are holding to the belief that Clear Channel put forth in their original acquisition strategy - "You can't lose money because the stations will continue to appreciate in value". I'm not sure if that's always true, but the assets that CC has sold already brought in more cash than expected. The majority of shareholders apparently think that they'll get a bigger slice of pie if they hold onto their stock, and CC continues to sell off marginal and/or non-core properties and concentrates on paying off debt while increasing profitability of the core business.

 

[davideduardo]

The New York Times says the two players, Bain Capital Partners and Thomas H. Lee Partners, added another twenty cents to their offer, upping it to $39.20 a share

The board had not rejected the prior two offers... both were accepted by the board.

 

[SaltyDog]

The board had not rejected the prior two offers... both were accepted by the board.

Setting aside for a moment the fact that no one asserted that it was the board that rejected the offers, a Clear Channel Press release says that they rejected ("did not accept") at least one offer. The board is not the obstacle to approval, but the shareholders are.

"Clear Channel Communications, Inc. Announces Receipt of Term Sheet Contemplating Change in the Terms and Structure of the Proposed Merger with Private Equity Group Co-Led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC

New Terms and Structure Not Accepted by Board

San Antonio, Texas, May 3, 2007 – Clear Channel Communications, Inc. (NYSE: CCU) today announced that the board of directors received a term sheet contemplating a change in the terms and structure of the proposed merger between the Company and the private equity group co-led by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P.

The term sheet contemplates (i) an increase in the merger consideration to be paid to unaffiliated shareholders from $39.00 to $39.20 per share, a 0.5% increase, and (ii) the opportunity for each shareholder to elect between cash and stock in the surviving corporation in the merger (up to an aggregate cap equivalent to 30% of the outstanding shares immediately following the merger (or approximately 6% before the merger)). Under this proposal, each of L. Lowry Mays, Mark Mays and Randall Mays (and their affiliates) and each director of the Company would be entitled to receive $37.60 per share in cash for each share of common stock (and options) held by them (or in the case of a rollover, shares with a value of $37.60 per share), in lieu of the $39.20 per share. Following the consummation of the merger, the shares would trade over the counter, and not be listed on any national stock exchange.

Acceptance of the proposal would result in a delay in the special meeting to consider the merger, currently scheduled for May 8, 2007, by as much as 90 days in order to allow the Company an opportunity to prepare, file and process a registration statement with the Securities and Exchange Commission and distribute it to the Company’s shareholders.

The board of directors of Clear Channel, with L. Lowry Mays, Mark Mays, Randall Mays and B.J. McCombs recused from the vote, determined not to accept the new terms and structure. The board noted that the increase in merger consideration was only 0.5% more than currently provided for and the change in structure would require a delay in the date of the special meeting of up to 90 days with no certainty that the transaction would be approved by the Company’s shareholders. Since the announcement on April 18, 2007 of the increase in merger consideration from $37.60 to $39.00 per share, significant shareholders of the Company have privately or publicly made known their opposition to the merger at $39.00 per share and their lack of interest in stub equity; two of the country’s leading institutional proxy advisory services, Institutional Shareholder Services and Glass Lewis & Co., have recommended against the merger transaction, stating that the $39.00 per share purchase price is too low; and tabulated proxies received by the Company’s board of directors currently reflect a vote against the merger of more than the required 1/3 of the outstanding shares necessary to defeat the merger proposal.


The board concluded to convene the special meeting of shareholders scheduled to take place on May 8, 2007 and allow the shareholders to vote on the existing merger proposal.