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Clear Channel gets AMFM
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October 4, 1999: 1:56 p.m. ET
Purchase of biggest radio broadcaster valued at $17.4B, plus debt
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NEW YORK (CNNfn) - Clear Channel Communications Inc. agreed Monday to acquire AMFM Inc., the country's largest radio broadcaster, in a deal valued at $17.4 billion in stock, plus $6.1 billion in debt.
The deal would create a combined company that operates approximately 830 radio stations and more than 425,000 outdoor displays in 32 countries. The company also would own 19 television stations.
AMFM, formerly known as Chancellor Media Corp., operates about 443 radio stations in 100 markets. Clear Channel operates radio and TV stations as well as about 425,000 outdoor advertising displays.
Under terms of the deal, AMFM (AFM) shareholders will receive 0.94 share of Clear Channel (CCU) for each AMFM share they own.
Based on AMFM's stock price of 63-7/8 at Friday's market close, the deal values AMFM shares at about $75.90 apiece, an 18 percent premium.
AMFM shares rose 3-1/4 to 67-1/8 in afternoon trade; Clear Channel shares fell 2 to 78-3/8.
Analysts immediately applauded the deal. Leland Westerfield, PaineWebber broadcast analyst, raised his fiscal 2000 stock price target on Clear Channel shares to $101 from $89 while reiterating his "buy" rating on the stock.
"For investors, Clear Channel represents a must-own core media sector holding in our view," Westerfield said in a research note. "With $46 billion in equity capital at the new company, we see the announcement of an accretive deal structure … as an ongoing series of stock price catalysts."
After the deal is concluded, AMFM shareholders will control 37 percent of the new company.
The companies expect to divest about 125 radio stations in order to obtain regulatory approval.
The deal comes after a recent ruling by the Federal Communications Commission that allows television companies to own two stations in the same market, under certain circumstances.
Clear Channel Chairman and CEO Lowry Mays will head the new company, which will keep the Clear Channel name. He said the deal reflects the growing mobility of Americans, who spend more time driving and listening to the radio and viewing billboard advertisements.
"This merger creates the world's preeminent out-of-home media enterprise focused on the fast-growing radio and outdoor advertising sectors," he said in announcing the deal.
The purchase is expected to close in late 2000, pending shareholder and regulatory approval. 
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Clear Channel
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