Clear Channel – Take Three

Clear Channel Communications has again delayed a vote to privatize, with one offer taken off the table and replaced with another sweetened bid made at the last minute.

Clear Channel’s board of directors initially rejected both offers May 7th, but relented the next day on the newer bid. The shareholder vote is now scheduled for May 22nd, coinciding with the company’s annual meeting. It marks the third attempt to complete a shareholder vote to privatize.

Private equity firms Thomas H. Lee Partners and Bain Capital Partners are joined in the renewed effort by dissident shareholder Highfields Capital Management. The latest offer pencils out to $30.20 per share and includes an option for shareholders to take a stake in the privatized company in the form of shares that could be traded over the counter, according to the Wall Street Journal.

Highfields opposed previous buyout offers, and analysts had advised shareholders the offers were too low. Clear Channel’s board of directors on May 7th rejected a $39 per share offer when early proxy votes were counted a few days earlier and the deal was statistically doomed.

The media conglomerate and former parent company of Live Nation was undervalued in the original offer, according to Institutional Investors Services and Glass Lewis & Co. Two of Clear Channel’s largest shareholders, Fidelity Management and Research, and Highfields, initially opposed the buyout.

The privatization plan was heavily supported by Clear Channel’s founding family – particularly patriarch Lowry and his son, Mark, who went to the mat pitching the deal. The rejection by shareholders could mark the beginning of the end of the Mays family’s grip on the radio giant, according to the Wall Street Journal.

Some investors are angry about the privatization attempt; including complaints about the way the company is managed, a perceived lack of responsiveness to shareholder concerns, and a "golden parachute" plan for Mays family members should they decide to take their leave from the board of directors, the paper reported.

The week before the scheduled May 8th vote, a last-ditch effort was made to address the latter concern, though it didn’t appear to affect the outcome.

Lowry, Mark and CFO Randall Mays could have earned cash payments totaling 7.99 times their annual salary and bonus, according to the WSJ. In the week before the shareholder vote, the provision was revised downward so the payment would be 2.99 times salary/bonus, which is reportedly more in line with industry norms.