Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
In a Big Bet on Radio,Private-Equity Group Buys Clear Channel [Wall Street Journal]
Summary: Thomas H. Lee Partners and Bain Capital outbid a three-party group including Providence Equity, KKR and Blackstone to acquire Clear Channel Communications for $37.60/share. The latter party bid $36.85. The deal is valued at $26.7b including $8b in debt. Not contingent on the deal, Clear Channel announced it is divesting 448 non-top 100 radio stations and is exiting the TV business. The Mays family will stay on to manage the firm, and to assuage investor concerns over unfair compensation from the private-equity deal, has given up a sizable portion of their change-of-control benefits. Thomas Lee and Bain see annual returns coming in at 20%-30%. Despite problems in the radio business due to intense competition from other media and entertainment sources, private-equity is attracted to the steady cash flows and possibility of growth via new technology. Clear Channel's CEO commented yesterday, "The market was not appreciating the equity, and we didn’t see that turning around." Its shares gained 3.63% on the news to close at $35.36.
Related links: Clear Channel press releases: Merger Agreement with Private Equity and Radio Station Divestitures, Exiting TV Business. • Media coverage: New York Times. Commentary: Clear Channel Bidding War Rages On • In Clear Channel Buyout Talks, Billboards Loom Large • Clear Channel Shows Mixed Q3 Results Ahead of Possible Sale. Conference call transcripts: Clear Channel Q3 2006.
Potentially impacted stocks and ETFs: Clear Channel (CCU-OLD) • Competitors: Citadel Broadcasting (NASDAQ:CDL), Cox Radio Inc. (CXR), Cumulus Media (NASDAQ:CMLS), Entercom Comm. (NYSE:ETM), Sirius Satellite Radio (NASDAQ:SIRI), XM Satellite Radio (XMSR) • ETF: PowerShares Dynamic Media (NYSEARCA:PBS)
Seeking Alpha is not affiliated with Wall Street Journal.