By
David Lee Smith
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May 15, 2008
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It seems as if the Clear Channel (NYSE: CCU ) buyout saga started back when Fibber McGee & Molly and similar shows were the toast of radioland.
Of course, it wasn't that long ago. Only about a year and a half has passed since the announcement that private equity firms Bain Capital Partners and Thomas H. Lee Partners would take America's largest radio station operator private. But effectively that was a very long time ago -- perhaps not in months or years -- but in circumstances. Since then, the credit markets have become largely dysfunctional and radio ad revenues have undergone a steady slide.
But now, after disagreements that led to lawsuits between the company and its proposed buyers on the one hand, and the six banks that were to be part of the process -- including Citigroup (NYSE: C ) , Morgan Stanley (NYSE: MS ) , Royal Bank of Scotland (NYSE: RBS ) -- on the other, the privatization looks to be all over but the shouting. The difference will be a price of $36 a share, not the originally agreed on $39.20.
Of course, nothing is guaranteed. The final stamp will require Clear Channel's shareholders to vote again, probably within the next few weeks. Two-thirds of them must vote in the affirmative. But with the stock closing at $34.82 on Wednesday -- or only 3% below the newly agreed-on price -- the betting clearly is that the deal's as good as done.
And despite the reduced price they'll receive, Clear Channel's shareholders will fare far better than those of Cumulus Media (Nasdaq: CMLS ) . The Atlanta-based operator of slightly more than 300 radio stations saw its own buyout deal fall apart earlier this week, resulting in a 24% one-day hit to its share price.
As to the investment stance that Fools should now take on Clear Channel, there shouldn't be any. The deal's likely to go through. At this stage, the best you could do would be to collect the small differential between the newly agreed-on price and the current trading level. And it's really not worth it.
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