Status Report: Clear Channel - Bain Capital Partners/THL

Feb. 1.08 | About: Clear Channel (CCU-OLD)

The Clear Channel (CCU-OLD) - Bain Capital Partners/THL deal has become yet another target of speculation regarding a possible collapse due to broader market issues and the growing perception that any transaction involving private equity and/or complex financing is at risk.

This is, to put it mildly, an absurd and possibly calculated reaction in this particular situation.

In this case, there are at least three extremely solid reasons to anticipate the companies making every effort to complete this transaction. First, the companies have gone through a considerable amount of time and expense dealing with the FCC review, which was successfully cleared just days ago. Parties that have endured what they parties in this FCC case have, do not simply walk away from the deal after obtain the regulatory consent.

Second, of the deals Bain (et al.) are currently involved in, this one if the least likely to fall through by far. The COMS transaction is very clearly the one on shaky ground, and the CCU buyout consortium must be well aware of this by now. It can be reasonably assumed that this is the deal Bain and its partners intend to complete, while the COMS deal has to be considered a secondary matter.

Third, CCU is an established, if not iconic, organization with virtually unlimited potential under new ownership/leadership. The rationale behind this buyout is extremely obvious and can not have possible changed due to the broad-market issues plaguing some other deals. CCU is the largest -- if not dominant -- radio broadcasting corporation in the world. It is not a retailer, lender, or any other type of operation exposed to the credit problems of other industries. This basic concept seems to have been lost on many analysts in where this is concerned.

In short, there is absolutely no legitimate reason to anticipate the Bain-led group reconsidering this deal. On the contrary, there is ample reason to believe that the transaction will be completed shortly after obtain HSR clearance. Although, as noted in previous updates, there remains some chance that the HSR review may encounter some delay, there is a very solid chance that the DOJ will simply clear this deal quickly based on the FCC's approval.

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