Clear Channel agrees to be taken private

updated 6:29 p.m. ET Nov. 16, 2006

SAN ANTONIO - Three weeks.

That’s how long it took radio giant Clear Channel Communications Inc. to accept a buyout offer led by two private equity firms after announcing in late October that it was considering “strategic alternatives.”

And while the nation’s biggest radio station operator has left the door open a crack in case something better comes along, it agreed to an $18.7 billion offer from Thomas H. Lee Partners LLC and Bain Capital Partners LLC.

In addition to paying $37.60 in cash for each Clear Channel share, the buyers will assume an additional $8 billion in debt.

CEO Mark Mays said the time was right to take the company private because its stock was being undervalued by equity markets.

“We tried to figure out what would be a way out of that and obviously the private equity markets have a much different view,” he said by phone.

Mays said $37.60 was a “great price” for shareholders and the private equity firms “think they got a great company and have a long-term view associated with it.”

The transaction would be one of the biggest deals to take a company private, 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.

“Basically they are telling you that we have a firm offer and a firm deal, but we are not going to get locked into it yet,” said Frederick Moran, a Boca Raton, Fla.-based analyst for Stanford Financial Group.

Clear Channel owns or operates 1,150 radio stations and is the largest operator of radio stations in the country.

The company said in a regulatory filing that it doesn’t expect any senior management changes or significant layoffs.

Mark Mays will remain CEO while Randall Mays, his brother, will stay on as chief financial officer. Their father Lowry Mays, the chairman, will continue to have an active role, the company said. Mark Mays said Thursday that may mean a “chairman emeritus” role for his father.

“Clear Channel is an exceptional media franchise that is well-positioned to grow thanks to the solid foundation the Mays family has created,” John Connaughton, a managing director at Bain Capital, said in a statement.

It’s not yet clear how much the Mays stand to make in the deal. Clear Channel said Thursday that three members of senior management agreed to “significantly” reduce payments that would be made on a change of control.

A Clear Channel spokeswoman declined to elaborate. The Mays family owns about 7 percent of the company.

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