Clear Channel Clouds, Miners Unmerged
The leveraged buyout of Clear Channel stalls as the deal
NEWS AT A GLANCE
Clear Channel deal on the rocks
The $19.5 billion acquisition of radio giant Clear Channel Communications by private equity firms Bain Capital and Thomas H. Lee Partners has reportedly been thrown into doubt after the banks financing the deal balked. Clear Channel and its buyers are preparing to sue the lenders to force them to complete the deal. (The New York Times, free registration) Clear Channel shares fell 21 percent in extended trading, to $25.82; the agreed purchase price is $39.20 a share. (AP in Yahoo! Finance) The deal is the latest leveraged buyout to face dissolution. “If it fell apart, it would be seen as a casualty of the credit crunch,” said RCB analyst David Bank, as well as “cyclical challenges of the radio industry.” (Reuters)
Vale, Xstrata merger called off
Brazilian miner Vale and Switzerland’s Xstrata PLC said they have terminated merger talks, scuttling what would have become the world’s largest mining company. The merger was reportedly worth about $90 billion. (MarketWatch) The deal hit a snag over commodity trader Glencore International, Xstrata’s biggest shareholder, which wanted to keep marketing rights to several of Xstrata’s products. (AP in CNNMoney.com) That was “the real stumbling block,” said analyst Peter Arden at Ord Minnett in Sydney. “It is not as if Vale are novices at what they are doing, they don’t need anyone to hold their hand to sell their product.” Xstrata shares fell as much as 12 percent in London early today. (Bloomberg)
Cable providers mull WiMax stake
Cable giants Time Warner Cable and Comcast are in talks to finance the high-speed WiMax wireless network being pushed by Sprint Nextel and Clearwire, The Wall Street Journal reported. Comcast would invest up to $1 billion, while Time Warner would contribute $500 million. Other investors include Intel and Google. (Reuters) The investment by the cable firms would be a direct challenge to wireless companies Verizon and AT&T, which have made big pushes into TV and Internet service. “Comcast and Time Warner are home-, broadband-, and PC-oriented, so WiMax as a choice to get into wireless makes sense for them,” said Jupiter Research analyst Julie Ask. (The Washington Post, free registration)
Cutting costs, and hair, in Miami
The Miami area tied Las Vegas for the dubious prize of quickest-falling house prices, at 19.3 percent, according the S&P/Case-Schiller index, and local residents are feeling the squeeze. As their houses lose equity, Floridian homeowners are cutting back on expenses. In Miramar, 23 miles north of Miami, Richard Welch has canceled his cable and is cutting back on groceries, after his house lost $145,000 in value since last year. And Rita Roland cut off 11 inches of her 14-inch-long hair to save $1,600 a year in salon trips. “I looked at my house as a bank account,” she said. “I’m looking at not gaining money on this stock that I call a house, and may actually lose money.” (Bloomberg)
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