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NEW YORK - Clear Channel Communications, the biggest radio broadcaster in the US, is being taken over in a US$26.7 billion ($40.2 billion) deal that ranks among the biggest private equity acquisitions.
Lowry Mays, who founded the company with the purchase of one San Antonio radio licence in 1972, and his sons, Mark and Randall, stand to net US$1.3 billion. They will continue to run the company in the private arena, shutting the microphone on 22 years as a publicly traded company.
A consortium led by Bain Capital and Thomas H. Lee emerged triumphant yesterday from an auction of the company, which owns 1150 radio stations and 42 television stations. The deal was priced at a 10 per cent premium to Wednesday's share price, reflecting intense competition from a consortium led by Kohlberg Kravis Roberts and Blackstone Group. The deal, which values the equity at US$19 billion, includes about US$8 billion in debt.
Private equity firms are flush with cash from institutional investors searching for above-average returns.
Big buy-out firms are also increasingly willing to club together to bid for multi-billion dollar companies.
In just the past three months, the UK airports operator, BAA, and the US hospitals group, HCA, have agreed to go private in deals worth US$21.8 billion and US$21.2 billion.
David Bank, an analyst at RBC Capital Markets, said Clear Channel was selling for a compelling price. "The only thing that can be a concern is that Thomas Lee is involved in a lot of other media properties so closing could take longer than expected. I can't imagine that they didn't vet this with regulators though."
Clear Channel grew to dominate the US radio market thanks to an acquisition spree in the wake of the 1996 deregulation of the radio industry. Its scale and market power has brought with it criticism, and the company has been fighting accusations of pursuing a right-wing agenda. It syndicates the right-wing shock jock Rush Limbaugh and some of its stations banned Madonna and Dixie Chicks records after they made anti-war comments.
Clear Channel also announced plans to sell about 40 per cent of its smaller radio stations, to concentrate on those in the biggest US markets. It is also putting its 42 local television stations up for sale. And yesterday, there was speculation that the new owners may also wish to sell Clear Channel's controlling stake in Clear Channel Outdoor Holdings, the billboard advertising giant which it spun off last year.
- INDEPENDENT
