Clear Channel shareholders vote next Tuesday on whether to sell the company to private equity and go private. With ISS now onboard (9/19/07 RBR #183), Bear Stearns analyst Victor Miller predicts the deal will get the required two-thirds shareholder support. Once the deal has gotten shareholder approval, Clear Channel can file for antitrust regulatory approval, and Miller figures closing could come as soon as Thanksgiving. At Wednesday’s closing stock price of 37.7, he calculates the radio take-out multiple at 10.5 times 2007 EBITDA, compared to his earlier estimate of 9.4 times in May.
Under the going private deal, shareholders will be able to choose whether to take 39.20 per share in cash, or convert their shares to new shares in the private company, which will not be listed on any stock exchange. What, then, is the value of that equity "stub," Miller asked, then provided clients with an answer based on his observations of the market. "At 37.72, and assuming a 20% minimum return on deal stocks, a mid-November to mid-December close and a 20% pro-ration, we believe that the value of the ‘stub’ ranges from 36.96 to $40.06, a 6% discount to 2% premium to the proposed 39.20 cash price," he wrote.