M&A

Clear Path for Clear Channel Deal

A long-stalled acquisition looks to be finally nearing fruition.
Stephen TaubMay 23, 2008

The proposed acquisition of Clear Channel Communications by private-equity firms for $17.9 billion has taken a large step forward.

The radio giant says a bank syndicate has fully funded the debt financing for the deal. Under its terms, Clear Channel shareholders will receive $36 in cash or stock for each share they own. The new price tag is below the $37.60 that a number of shareholders had opposed in November 2006, when the media company initially struck its deal with Bain Capital Partners and Thomas H. Lee Partners. The price is also 8 percent below the most recent offer of $39.20.

“Today’s actions significantly increase the certainty that our merger will close,” said Mark Mays, chief executive of Clear Channel. “Cash on the barrelhead for one of the largest LBOs in history is an enormous win for our shareholders.”

The bank syndicate behind the transaction consists of Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Royal Bank of Scotland, and Wachovia. Under the settlement, the parties agreed to place all financing into an escrow account, pending completion of the transaction.

The private-equity sponsors and certain shareholders investing in the merged company are required to fund the equity financing into escrow by May 28.

Meanwhile, the bank syndicate was dismissed from lawsuits the private-equity firms filed in Texas and New York in March that had sought to enforce all contracts related to the merger. The banks, in turn, agreed to dismiss their appeals, Clear Channel says.

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