Fate of Clear Channel still unresolved

The buyout of Clear Channel Communications Inc. remains anything but clear.

The high-stakes poker game to own the nation’s largest radio broadcasting firm and billboard giant took another turn Wednesday when, on the eve of a shareholder vote, the company agreed to a sweetened, $39-a-share takeover offer from private equity investors valued at $19.5 billion.

The bid by Thomas H. Lee Partners and Bain Capital Partners is about 4% higher than what they bid in November. The investment firms also would assume $7.7 billion in Clear Channel debt.

But at least two major stakeholders in the San Antonio-based company appeared entrenched in their opposition to the deal, now rescheduled for a May 8 shareholder vote.

Mutual fund company Fidelity Investments, Clear Channel’s largest shareholder, will still vote against the proposed buyout, said a person familiar with the firm’s strategy.

Boston-based Highfields Capital Management, the third-biggest shareholder, also will reject the deal as undervalued, Bloomberg News and the Associated Press said.

Together, Fidelity and Highfields control 15% of Clear Channel’s shares. The deal requires approval by two-thirds of the shareholders, giving opponents significant clout.

Fidelity spokesman Vin Loporchio declined to comment, and calls to Highfields spokesman Larry Larsen were not returned.

The California Public Employees’ Retirement System, the largest U.S. public pension fund, joined the opposition Monday, casting its 3.34 million shares against the purchase. Calls to CalPERS on Wednesday weren’t returned.

Investors appeared skeptical Wednesday. Clear Channel shares slid 49 cents to $36.23.

Clear Channel put itself up for sale last fall after stock buybacks, the sale of 10% of its outdoor advertising business and the spinoff of Live Nation Inc., its concert promotion unit, failed to perk up its share price.

Bain and Lee issued a statement after the close of trading, calling the revised bid their “best and final offer.” The firms vowed to abide by the decision of shareholders next month.

The firms had insisted that they would not revise their earlier, $37.60-a-share offer, but as public resistance grew they sweetened the pot.

Analysts said the new offer had a better chance of success but still faced tough odds.

“It’s not exactly a slam dunk,” analyst James Boyle of CL King & Associates told Reuters. “Both sides will continue to posture and the soap opera continues and the plot thickens.”

In a note to clients, Banc of America Securities analyst Jonathan Jacoby said the deal looked likely to fail, as it fell short of the $40-a-share “magic number” that would sway core investors.

Jacoby said additional break-up fee language included in Wednesday’s agreement made it unlikely that another suitor could step in with a higher offer.

Shareholder advisory firm Glass, Lewis & Co., which opposed the original deal, will study the new agreement before deciding whether to change its recommendation, spokeswoman Bayley Diamond said.

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josh.friedman@latimes.com