Cumulus Media buyout deal collapses
NEW YORK (Reuters) - Cumulus Media Inc (CMLS.O) on Monday became the latest leveraged buyout deal to collapse as the investor group set to buy the radio broadcaster for $1.3 billion failed to agree on the transaction terms.
The deal, announced last July, called for Cumulus' chief executive, Lewis Dickey, other Dickey family members and an affiliate of Merrill Lynch Global Private Equity to buy Cumulus for $11.75 per share, a 40 percent premium at the time.
Cumulus, the second-largest U.S. radio company based on the number of stations, said on Monday the investor group was "unable to agree on terms on which they could proceed with the transaction".
It is the latest in a string of leveraged buyout deals that have fallen apart since the credit crunch last summer. A planned $20 billion deal for Clear Channel Communications Inc (CCU.N), the No. 1 U.S. radio station operator, has also run into trouble and it currently in litigation.
The cost of financing LBOs rose significantly after the summer when defaults on subprime loans caused turmoil in the credit and equity markets. Other deals to collapse include the $1.8 billion sale of mortgage and vehicle fleet company PHH Corp (PHH.N) and buyouts of equipment renter United Rentals Inc (URI.N) and audio equipment maker Harman International Industries Inc (HAR.N).
Cumulus shares were down $1.48 to $4.33 in afternoon Nasdaq trade. The shares have traded significantly below the proposed buyout price for months, indicating investors' expectation that the deal would fall through.
"Our business remains fundamentally sound and we intend to continue to operate it aggressively and explore opportunities to create and deliver value for our shareholders," Lewis Dickey said in a statement on Monday, without providing details.
The investor group has agreed to pay Cumulus a deal termination fee of $15 million.
Cumulus said its board intends to explore, in the "very near term," a new stock buyback plan to provide liquidity opportunities to stockholders.
(Reporting by Megan Davies in New York; additional reporting by Savio D'Souza in Bangalore; editing by John Wallace)
WASHINGTON - U.S. economic growth accelerated more than expected in the second quarter and the decline in output in the prior period was less steep than previously reported, bolstering views for a stronger performance in the last six months of the year.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.