There may be a shareholder vote at Clear Channel Communications (NYSE: CCU ) on Tuesday, and there may not. And the current $39.20 private equity bid for the company could be changed ... or perhaps it won't be. The only thing sensible Fools can do regarding the stumbling private-equity effort to acquire the company is to watch the center ring of this circus currently playing in San Antonio.
For the sake of history, let's return to those thrilling days of yesteryear, or specifically to last November, when a pair of private-equity firms, Thomas Lee Partners and Bain Capital Partners, offered $37.60 a share for Clear Channel, the nation's largest operator of radio stations with approximately 1,100 properties in its portfolio. After major shareholders Fidelity and Highfields Capital Management voiced that they would not support the buyout at that price, a new deal was issued at a premium of 4% to the original offer. However, the $39-per-share price tag still didn't please shareholders.
Finally, last week the deal was again sweetened -- or tinkered with -- when the offer price was boosted from $39 to $39.20, only 0.5%, by my calculation, with the added option that shareholders be permitted to choose between receiving cash and retaining their stock in the surviving corporation. That new wrinkle was rejected, however, when the Clear Channel board late last week elected not to accept the latest offer.
Two proxy advisory services -- Institutional Shareholder Services and Glass Lewis&Co. -- told shareholders the price was too low and advised them to vote against the transaction. As of Friday, it looked as though the required one-third of outstanding shares opposing the deal was met as votes were being tallied up. However, a few shareholders are still pressuring Clear Channel to rethink the new proposal, claiming they think the company made its decision too quickly.
Since the time of the first offer, those opposing the price have pointed to Clear Channel Communications' 90% ownership of outdoor advertising entity Clear Channel Outdoor (NYSE: CCO ) , which has increased in value about 20% in the past year. Nevertheless, Outdoor continues to trade at somewhat of a discount to rival Lamar Advertising (Nasdaq: LAMR ) . Indeed, according to those opposing the buyout, Outdoor's higher value renders insufficient the resulting implicit valuation in the offers for Clear Channel Communications.
So here are some predictions, Fools: I forecast that the Lee-Bain offer again will be tweaked, that Tuesday's vote will again be delayed -- it's already been pushed back once -- and that, even with Roger Clemens having signed to pitch for the Yankees, the Boston Red Sox will win the American League pennant. Fools probably shouldn't play financially in the Clear Channel silliness, but this circus certainly is worth the price of admission.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Fool has a disclosure policy.
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