Thomas H. Lee Partners and Bain Capital sweetened their bid yet again for Clear Channel Communications, but the proposal was promptly rejected by the media company’s board.
The private equity firms were offering shareholders $39.20 per share instead of $39 per share, as well as a choice between cash and stock (capped at a 30 percent equity stake), but the board said accepting the proposal would delay by as much as 90 days a shareholder vote on the bid. That is currently scheduled to take place 8 May.
Furthermore, the board said in a statement, “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”.
The increased offer of $39 per share – which TH Lee and Bain said was their “best and final offer” – came days after The California Public Employees’ Retirement System became the latest major shareholder to voice opposition to the bid, and one day before shareholders were scheduled to vote on the proposed buyout. Fidelity Management & Research and Highfields Capital Management are among the shareholders who’ve opposed the initial offer, arguing it undervalued the San Antonio, Texas-based company.
Pursuant to Texas law, two-thirds of shareholders must approve the buyout for it to proceed.
As growth in internet advertising fuels media consolidation, the media sector has been become particularly attractive to private equity firms. Last year, there were 35 deals in the sector (including the proposed Clear Channel buyout), according to a report by PricewaterhouseCoopers. Those deals were worth €19 billion, representing a 111 percent increase in value and a 13 percent increase in volume as compared to 2005.