NEW YORK -- Clear Channel Communications Inc.'s rejection of a revised buyout bid from Bain Capital Partners and Thomas H. Lee Partners LP is believed a signal that the private equity firms are headed for defeat at next week's shareholder meeting.
Directors of San Antonio-based Clear Channel, the largest U.S. radio broadcaster, rejected Thursday a bid of $39.20 a share from Bain Capital and Thomas H. Lee, saying it wasn't materially better than a $39 proposal shareholders were poised to defeat.
The decision underscored the influence of shareholders including Fidelity Investments, who said the $19.4 billion price was too low. Clear Channel's founding Mays family opted to go private after asset sales and share buybacks failed to raise the share price. In rejecting the revised bid, Clear Channel said investors who oppose the existing offer have enough votes to block a deal. Shareholders are scheduled to vote Tuesday.
"I think the odds are pretty slim," said David Bank, a New York-based analyst with RBC Capital Markets. He rates Clear Channel shares "outperform" and doesn't own them.
The revised proposal also offered investors the choice of cash or stock in the new company.
The company pointed out "significant shareholders" who aren't interested in buyout terms that include stock, as well as opposition from the investor advisory companies Institutional Shareholder Services and Glass Lewis & Co.
Shares of Clear Channel rose 40 cents, or 1.1 percent, to $36.35 in New York Stock Exchange composite trading. They have climbed 2.3 percent this year, after gaining 13 percent last year.
Matt Benson, a spokesman for Boston-based Thomas H. Lee, declined comment. Alex Stanton, a spokesman for Bain, couldn't be reached. Larry Larsen, a spokesman for shareholder Highfields Capital Management LP, declined comment.
Thomas H. Lee and Bain raised an earlier bid of $37.60 a share to $39 on April 18, saying at the time it was their "best and final offer." The latest proposal represents an increase of less than 1 percent to unaffiliated shareholders.
Under the revised offer, company co-founder L. Lowry Mays, Chief Executive Officer Mark Mays and Chief Financial Officer Randall Mays, as well as company directors, would have received cash or stock worth $37.60 a share, or $1.60 less then other shareholders. The Mays, as well as company co-founder B.J. McCombs, didn't take part in the board vote.
In an e-mail, Clear Channel spokeswoman Lisa Dollinger declined to comment beyond the company's statement.
Under Texas law, the buyout requires approval by two-thirds of shareholders. In addition to Fidelity and Highfields, which own 15 percent of Clear Channel shares, ISS and Glass Lewis deemed the price too low.
With so many shares owned by investors who oppose the deal, Bank said it is unlikely to be approved. "The math doesn't work," the analyst said.
Clear Channel said May 2 that it had agreed to sell 201 radio stations as part of a plan to shed assets while preparing to go private. Clear Channel has signed deals to sell 362 stations for about $820 million, bringing the company closer to a goal of selling 448.
Clear Channel said in November that it would also sell all its television stations as part of a plan to raise $1.88 billion and focus on radio broadcasting in larger cities.