Clear Channel Enters into Merger Agreement
Friday, 17 November 2006
Clear Channel Communications, Inc., a global leader in the out-of-home advertising industry, has announced the execution of a definitive merger agreement with a group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC, pursuant to which the group will acquire Clear Channel in a transaction with a total value of approximately $26.7 billion, including the assumption or repayment of approximately $8.0 billion of net debt.
Under the terms of the agreement, Clear Channel shareholders will receive $37.60 in cash for each share of Clear Channel common stock they hold, representing a premium of approximately 25 percent over Clear Channel’s average closing share price of $29.99 during the 30 trading days ended October 24, 2006, the day before the Company first acknowledged that it was evaluating strategic alternatives.
Morgan Stanley, Citigroup, and Deutsche Bank as well as Credit Suisse, RBS and Wachovia are acting as financial advisors and providing firm financing commitments to the private equity group. Morgan Stanley, Citigroup, Deutsche Bank, Credit Suisse and RBS are also providing equity commitments.
The board of directors of Clear Channel, with the interested directors recused from the vote, has unanimously approved the merger agreement and has resolved to recommend that Clear Channel’s shareholders adopt the agreement. A special advisory committee consisting of disinterested directors unanimously determined the terms of the transaction to be fair.
Clear Channel Chief Executive Officer Mark P. Mays said, “We are very pleased to announce this transaction which provides substantial value to our shareholders. We look forward to working with Thomas H. Lee Partners and Bain Capital Partners to continue our business plan to provide exceptional programming to our audiences and value to our advertising partners.”
Scott Sperling, co-president of Thomas H. Lee Partners, stated, “Clear Channel is one of the nation’s truly great companies that has the finest collection of outdoor and radio assets in the industry. We are extremely pleased to be partnered with the management team led by Mark and Randall Mays and to have the opportunity to work with them and to grow this company that was created by its Chairman and founder, L. Lowry Mays. Clear Channel has tremendous long term growth opportunities in both the radio and outdoor businesses and we look forward to partnering with Mark and Randall to create value in the years ahead.”
John Connaughton, a managing director at Bain Capital, said, “We are very impressed with Clear Channel’s strong management team and the company’s leadership positions in a variety of markets and media formats. Clear Channel is an exceptional media franchise that is well-positioned to grow thanks to the solid foundation the Mays family has created. We look forward to partnering with Clear Channel as it continues to innovate in meeting the changing needs of the audiences and advertisers it serves.”
The merger does not require the consent of unsecured note holders and is not conditioned upon a merger, consolidation or going private transaction involving Clear Channel Outdoor Holdings, Inc.
The merger is subject to the approval of Clear Channel’s shareholders, requisite regulatory approvals and customary closing conditions. Under the merger agreement, Clear Channel may solicit competing bids from third parties through December 7, 2006, and may negotiate with parties that submit competing proposals by that time until January 5, 2007.
Clear Channel may, at any time, subject to the terms of the merger agreement, respond to unsolicited proposals. If Clear Channel accepts a superior proposal, a break up fee would be payable by the Company. There can be no assurance that the solicitation of proposals will result in any alternative transaction.
At the request of the disinterested directors, three members of senior management have agreed to significantly reduce payments that could be payable upon a change of control by an amendment to their employment agreements.
Clear Channel also today announced, by separate press release, that it intends to solicit buyers for 448 radio stations in selected small markets as well as for its television broadcasting division. The merger is not conditioned on the consummation of any of these sale transactions.
Goldman, Sachs & Co. is acting as exclusive financial advisor to Clear Channel and Lazard Frères & Co. LLC is acting as financial advisor to the special advisory committee. Goldman, Sachs & Co. and Lazard Frères & Co. LLC have each delivered a fairness opinion to the Board and special advisory committee, respectively. Akin Gump Strauss Hauer & Feld LLP is acting as legal advisor for Clear Channel and Sidley Austin LLP is acting as legal advisor for the special advisory committee. Ropes & Gray LLP and Dow Lohnes PLLC are serving as legal advisors to the private equity group.