Filed under: Deals, Law, Clear Channel Commun (CCU)
Private equity firms have begun to walk away from transactions to take a public companies private. In tight credit markets and facing a slowing economy, deals which looked good in early 2007 don’t look so hot now. In most cases the public company boards try to keep deals from breaking apart by lowering their asking price. Sometimes they take a break-up fee and allow the buyer out of its obligations.
Clear Channel Communications Inc. (NYSE: CCU) won’t take any of those “let the fish of the hook” routes. It has a deal with Providence Equity to purchase its Television stations for $1.2 billion. The transaction was announced ten months ago and has not closed yet.
According to The Wall Street Journal (subscription required), “Clear Channel is suing Providence for ’specific performance,’ a legal term which typically addresses the capability of the seller to force the buyer to finish a deal agreement.”
Market observers and the press state that many banks and buy-out firms are being advised by their attorneys to turn their backs on transactions instead of getting burned by deals that have begun to look to rich between signing a buy-out agreement and actually closing. Clear Channel is willing to gamble that it can win its case for closing a deal in court.
Douglas A. McIntyre is an editor at 247wallst.com.
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