Mays brothers will stay
The Lee/Bain group won the hotly contested bid over Providence Equity partners, KKR and Blackstone, with which Clear Channel's Mark and Randall Mays had been working prior to the sale. The Mays brothers will remain in their current positions as Clear Channel CEO and chief financial officer, respectively, despite the buyout.
"We are very pleased to announce this transaction which provides substantial value to our shareholders," Mark Mays said in a statement. "We look forward to working with Thomas H. Lee Partners and Bain Capital Partners to continue our business plan to provide exceptional programming to our audiences and value to our advertising partners."
Clear Channel is among a handful of companies, including Tribune Co., Cablevision and, just today, Reader's Digest Association, that have sought private-equity investors to remove themselves from the public markets. Wall Street has had a dour view of old media's future growth prospects, and that pessimism has depressed companies' share prices.
Selling smaller stations
Separately, Clear Channel announced it's looking to sell 448 of its 1,150 radio stations. However, the 448 included properties are all outside of the top 100 markets and comprise less than 10% of Clear Channel's total revenue. The company said the larger private-equity buyout is not dependent on the sale of those smaller stations.
In return for the sale to the Lee/Bain group, Clear Channel shareholders will receive $37.60 cash for each share of Clear Channel stock, a 25% increase over its closing share price of $29.99 on Oct. 24. As previous investor Wachovia Bank expressed in a statement, the price was adequate given the company's fourth-quarter improvements.
"We are not surprised by the mid-$30-per-share bid, as our LBO [leveraged buyout] analysis suggested a ceiling price of $38 per share, using the most aggressive assumptions, in our opinion," the bank stated.
Hopes for future
Despite continued dropoffs in radio activity, Scott Sperling, co-president of Thomas H. Lee Partners, said there are still plenty of long-term growth opportunities to be had in both the radio and outdoor businesses.
"Clear Channel is one of the nation's truly great companies that has the finest collection of outdoor and radio assets in the industry," Mr. Sperling said in a statement. "We are extremely pleased to be partnered with the management team led by Mark and Randall Mays and to have the opportunity to work with them and to grow this company that was created by its chairman and founder, L. Lowry Mays."