Static concerning the Clear Channel Communications Inc. buyout sent the stock and its peer Cumulus Media Inc. tumbling Tuesday, while another buyout target, Midwest Air Group Inc., soared.
Clear Channel's shares lagged the broader 0.78% Dow Jones Industrial Average gain, sliding 7.16% to $29.17 per share, its first sub-$30 close since Oct. 5, 2006. The Street has reacted bearishly to media reports detailing Clear Channel CEO John Hogan's Jan. 25 internal company e-mail ordering all general managers, business managers and vice presidents to instill immediate cost cuts to help pare down first-quarter expenses. This cost-cutting move comes as Clear Channel makes every effort to maintain its bottom line in preparation for the $22.8 billion, or $39.20 per share, buyout by Thomas H. Lee Partners and Bain Capital LLC.
Wall Street uncertainty about a Clear Channel buyout looks to have pulled down rival radio broadcaster Cumulus Media's shares, which sunk 4.46% to close at $6 for the day. One of the conditions on the Federal Communications Commission approval of the deal requires that the buyers keep their holding in radio chain Cumulus Media Partners "nonattributable."
The pending Midwest Air Group takeout brought brighter news, as its shares climbed 5.53% to close at $16.40. A $450 million, or $17 per share, deal for Midwest to be taken private by a consortium including TPG and Northwest Airlines Corp. looks to be nearing a close following months of regulatory delays. Northwest CEO Douglas Steenland during an investor conference call Tuesday said he expects the companies to receive regulatory approval and close the deal on time at the end of January. - Michael Rudnick
