Market Not Buying Recent Buyout Deals

from the about-that-offer... dept

Fri, Aug 10th 2007 1:22pm — Joseph Weisenthal

It's easy to forget that just because a buyout has been announced, there's no guarantee that it will actually go through. Pending private equity deals are particularly vulnerable at the moment, because they're all debt financed. One good way to get a sense of whether the market is expecting a given to go through is to look at the current market price of a stock compared to the buyout price. The wider the gap, the less likely it'll actually happen. These gaps are getting pretty wide on a number of deals, including a few discussed here. The purchase of Clear Channel was announced last November, but today the stock trades at 37% below the offering price. Alltel is in a similar boat, trading 22% below the buyout price, which was just announced in May. It's still possible, of course, that both of these deals will get done. But if current conditions persist, we may see them hang around in their current form for a bit longer.

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Filed Under: m&a, private equity
Companies: alltel, clear channel

4 Comments

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Chris, 10 Aug 2007 @ 2:22pm

Circuit City
Circuit City has been working with Goldman Sachs and was offered a buy out at $17 a share and is now trading in the $11 area, I would assume a buyout by a competitor or someone web based that wants to get into the retail realm.

but never assume anything...because some people are idiots and will never do the intelligent thing and others are biding their time not realizing they should have bought stock a long time ago. (Apple anyone?...who bought stock at $14 a share a few years back and kept it?)
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DML, 10 Aug 2007 @ 3:14pm

Isn't buyout price ALWAYS higher than trading pric
"One good way to get a sense of whether the market is expecting a given to go through is to look at the current market price of a stock compared to the buyout price. The wider the gap, the less likely it'll actually happen. "
It's my understanding that it's very common for the buyout price to be at some premium over the trading price.
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anonymous coward, 10 Aug 2007 @ 4:03pm

anything bad happening to clear channel feels me with warm, fuzzy, joy.
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Straightshooter, 13 Aug 2007 @ 1:21am

Clear Channel Buyout
Since allowing ownership of so many stations, TV stations and newspapers especially stations numerous in a given geographic area as they are now has had nothing but an extremely deleterious effect on our republic. Anything that would encourage/enforce a breakup of mass media ownership by companies such as Clear Channel and the four or five others who jointly own the vast majority of media outlets would be in the interests of America.
Maybe if such a breakup were to occur we would see real local news with divergent opinions again with the result being an informed public again.
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