Shareholders of Clear Channel Communications Inc., the biggest U.S. radio broadcaster, should reject its plan to be taken private for $19 billion because the price is too low, shareholder advisory firm Glass Lewis & Co. said Monday.
Private equity firms Thomas H. Lee Partners and Bain Capital Partners agreed in November to pay $37.60 a share and let the Mays family retain management control. But Glass Lewis said the company would be more valuable standing alone.
Chief Executive Mark Mays faces the challenge of winning over two-thirds of Clear Channel's shareholders, including his company's largest, Fidelity Investments, which is opposed to the price.
"It's another nail in the coffin," Joe Bonner, an analyst with Argus Research in New York, said of the Glass Lewis advice on the proposed buyout.
Shares of San Antonio-based Clear Channel fell 54 cents, or 1.5%, to $34.85.
Clear Channel decided to seek a buyer after failing to increase the stock price with share repurchases, the spinoff of its concert promotion unit and the sale of 10% of its outdoor advertising unit. The buyout must be approved by two-thirds of shareholders at a meeting March 21.
"Clear Channel shareholders should not acquiesce to the board's chosen strategy," Glass Lewis said.
Clear Channel said it was disappointed by the Glass Lewis report. It said directors undertook a comprehensive review of different options and the buyout offer was 28% higher than the average of closing share prices 60 days before Clear Channel put itself up for sale.