Clear Channel agrees to be sold for US$26.7bn

Clear Channel Communications Inc. announced Thursday it has entered into a definitive merger agreement with a private equity group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC, under which the group will acquire Clear Channel for about US$26.7 billion, including US$8.0 billion of net debt.

Clear Channel, the No. 1 radio broadcaster in U.S., said the deal calls for the group to pay US$37.60 in cash for each share of Clear Channel common stock.

The offer price represents a premium of about 25 percent over its closing share price of $29.99 during the 30 trading days ended October 24, the day before the Company first confirmed that it was looking at strategic alternatives, and 10.2 per cent over its closing price on Wednesday.

The global media and entertainment company said that the board has unanimously approved the merger agreement and recommends that its shareholders adopt the deal.

“We are very pleased to announce this transaction which provides substantial value to our shareholders. 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,” said Mark P. Mays, the Chief Executive Officer of Clear Channel.

As per the reports, Lowry Mays, the company's chairman of the board, who founded the company with the purchase of one San Antonio radio licence in 1972, will continue with his active role. His sons, Mark and Randall will continue as chief executive and chief financial officer, respectively. However, the financial details were not immediately available.

Under the terms of the deal, Clear Channel can solicit competing bids from third parties through December 7, 2006. The deal also allows it to negotiate with parties that submit competing offers by that time until January 5, 2007.

The deal has a provision of a break up fee that means if Clear Channel goes for any other superior proposal, a break up fee would be payable by the Company to Bain and Thomas H. Lee.

As part of the deal, the Mays family agreed to significantly reduce payments they could have received from a change in control. Lowry Mays stood to receive more than $23m and his two sons stood to receive $14m each.

In a separate release yesterday, Clear Channel, which owns 1,150 radio stations and 42 television stations in the country, announced its plan to sell 448 of its radio stations, all located outside the top 100 media markets in the U.S., and its TV broadcasting unit.

Clear Channel shares closed up 3.6 percent at $35.36 on Thursday at the New York Stock Exchange.