Clear Channel Communications, the nation’s largest radio station operator, said Thursday it has agreed to be acquired for about $18.7 billion by an investment group.
The company, which owns eight Valley radio stations — KESZ (99.9 FM), KFYI (550 AM), KGME (910 AM), KMXP (96.9 FM), KNIX (102.5 FM), KOY (1230 AM), KYOT (95.5 FM), KZZP (104.7 FM) — would become private in the transaction.
An investor group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC is paying $37.60 in cash for each share of Clear Channel, a 10.2 percent premium over its closing price on Wednesday. The buyers also are assuming about $8 billion in debt.
San Antonio-based Clear Channel’s shares jumped $1.33, or 3.9 percent, to $35.45 in afternoon trading on the New York Stock Exchange after rising earlier to a new 52-week high of $35.88.
The company said in a regulatory filing that it doesn’t expect any senior management changes or signifi cant layoffs.
No changes are expected at the Valley radio stations, said Joe Puglise, vice president market manager for Clear Channel Radio Phoenix.
“It’s going to be literally business as usual, especially in a market like Phoenix,” he said. “They’re divesting of the smaller radio markets outside the top 100, and of course the Phoenix market is 15. There’s going to be no visible or audible change in Phoenix at all. They’re selling their television division, but there are no TV stations that Clear Channel owns in Phoenix.”
Clear Channel has about 380 full-time and part-time employees in the Valley. All of the local stations are located in one facility at 44th and Van Buren streets.
“In terms of revenue ranking, Phoenix is one of the top 10 revenue markets for the company,” Puglise said.
Mark Mays will remain CEO while Randall Mays, his brother, will stay on as chief fi nancial officer. Their father, Lowry Mays, is the chairman and will continue to have an active role, the company said.
“Clear Channel is an exceptional media franchise that is well-positioned to grow thanks to the solid foundation the Mays family has created,” John Connaughton, a managing director at Bain Capital, said in a statement.
It’s not yet clear how much the Mays stand to make in the deal. Clear Channel said Thursday that three members of senior management agreed to “significantly” reduce payments that would be made on a change of control.
A Clear Channel spokeswoman declined to elaborate. The Mays family owns about 7 percent of the company.
James Goss, media and entertainment analyst for Barrington Research, said the price of $37.60 a share was in line with expectations.
“I don’t think there’s anything that’s happened that’s been totally surprising,” Goss said.
Clear Channel owns or operates 1,150 radio stations.
The company has until Dec. 7 to solicit competing proposals. Another bid for Clear Channel had been expected from Providence Equity Partners, the Blackstone Group and Kohlberg Kravis Roberts & Co.
“Basically they are telling you that we have a firm offer and a firm deal, but we are not going to get locked into it yet,” said Frederick Moran, a Boca Raton, Fla.-based analyst for Stanford Financial Group.
Kit Spring, an analyst for Stifel Nicolaus & Co., wrote in a note that shareholders should reject the initial offer.
“(Clear Channel’s) assets could command a much higher price if sold piece by piece, in our view,” the note said.
Moran said the other “wild card” in Thursday’s announcement was the fate of Clear Channel Outdoor, a major operator of billboard and bus-stop ads. Clear Channel owns a majority of the outdoor business, which trades separately.
Outdoor advertising company JCDecaux last week expressed interest in acquiring Clear Channel Outdoor.
Thursday’s announcement doesn’t include any provisions for taking Clear Channel Outdoor private, the company said.
The company’s directors have approved the agreement, with the board insiders recused from the vote.
Clear Channel said it expects to close the acquisition by the fourth quarter of next year.