Clear Channel board rejects new bid as vote nears

By Megan Davies

NEW YORK (Reuters) - Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research, Stock Buzz), the largest U.S. radio station operator, said late on Thursday it rejected a revised $19.6 billion bid from a private equity group, days before a crucial vote on the deal arrives.

The board said in a statement that recommending the bid would delay the date of a special meeting by up to 90 days, with no certainty the transaction would be approved by shareholders.

Bain Capital Partners and Thomas H. Lee Partners THL.UL originally made a $37.60-a-share bid to buy Clear Channel in November.

The bid ran into trouble when a small number of institutional shareholders indicated they would vote against it, arguing that it undervalued the company. In April, they increased the offer to $39 a share, but the shareholders still indicated opposition.

That, alongside a recommendation from influential proxy advisory service ISS to oppose the deal, meant the offer was in serious threat of being voted down at an upcoming vote scheduled for May 8, analysts previously said.

Late on Thursday, Clear Channel said in a statement it received a new proposal from the bidders to increase the offer to $39.20 a share to unaffiliated shareholders. The founding Mays family and Clear Channel board would receive the price they originally recommended of $37.60 a share.

The increased cash for shareholders was proposed to come from reducing the amount the Mays family and board received, rather than the private equity bidders increasing the amount they paid, several sources familiar with the situation said early on Friday.

The new offer also gave shareholders a choice between cash and stock in the surviving company as shareholders could take an interest in the privately owned company through owning a portion of up to 30 percent equity in Clear Channel.