WSJ: Cumulus Deal Could Ignite More Privatization
July 30, 2007 at 5:45 AM (PT)
CUMULUS MEDIA's deal to sell itself to a group of investors for $507.7 million could reignite interest in privatization attempts involving other radio companies, reports THE WALL STREET JOURNAL.
CUMULUS agreed to a buyout of $11.75 a share from a group led by CEO LEW DICKEY and an affiliate of MERRILL LYNCH GLOBAL PRIVATE EQUITY in a deal valued at $1.3 billion including debt. The price represents a 40% premium over FRIDAY's closing stock price.
While radio stocks rose broadly on the news, analysts say there are only a few companies that make likely candidates for privatization. EMMIS COMMUNICATIONS CORP., which tried to go private last year but had to withdraw the offer in AUGUST after independent directors said the price was too low, could potentially try again. An EMMIS spokeswoman says CEO JEFF SMULYAN has left the door open to another attempt, stating in a filing last year that he could from time to time revisit the privatization discussions with company directors.
Other possible candidates for privatization include RADIO ONE INC. and COX RADIO INC.
DICKEY adds the deal possibly paves the way for a combination of CUMULUS MEDIA INC., which controls mostly mid-market stations, and CUMULUS MEDIA PARTNERS, which was created at the end of 2005 to acquire large-market stations owned by SUSQUEHANNA-PFALTZGRAFF. CUMULUS MEDIA PARTNERS comprises CUMULUS MEDIA INC., BAIN CAPITAL, THE BLACKSTONE GROUP, and THOMAS H. LEE.
The CUMULUS deal is still subject to regulatory and shareholder approval. The company hopes to close the transaction early next year.