Clear Channel Arbitrage

Clear Channel's main businesses are Radio Broadcasting,International Outdoor Advertising and Americas Outdoor Advertising.The Radio Broadcasting division owns over 1176 domestic radio stations,51 television stations and a national radio network.The Company has a strong presence internationally in countries as far as Singapore and UK.


Current Price:$35.96
Price to Book Value:2.26
Price to Free Cash Flow:22.54
Price to Sales:2.52
5 year ROE per share Average:7.31%

What makes this interesting is that there is an arbitrage opportunity here.Management had agreed to a buyout by private equity firm Bain Capital and Thomas H.Lee Partners but soon after its two largest shareholders expressed disappointment with the $37.60 in cash per share.This forced the private equity firms to revise their offer to $39 in cash per share.

According to the company website, " Clear Channel Communications, Inc. (NYSE: CCU) today announced that it has entered into an amendment to its previously announced merger agreement with a private equity group co-led by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P., providing for an increase to $39.00 per share in the price shareholders will receive in cash for each share of Clear Channel common stock they hold. This is an increase from the previous price of $37.60 per share in cash"

Now, what will be the return on this ? Suppose you buy the stock at its current trading price ($35.96),you stand to receive $39 in cash for every share you owned

Realised Return=39-35.96/35.96
=8.45%

Not a bad return for a short term arbitrage opportunity!