The purchase will consolidate the radio properties of Hicks, Muse, Tate & Furst Inc, a private buyout firm and the largest shareholder in both companies.The deal comes as CBS plans to spin off its radio broadcasting group in an IPO.
On Wall Street, however, the Capstar acquisition stirred up little enthusiasm as investors watched most major market averages plunge. In recent trading, shares of both Capstar (CRB) and Chancellor (AMFM) dropped 7 percent, with Capstar off 1 1/2 to 20 and Chancellor down 3 9/16 at 41 3/16.
The companies expect the transaction, approved by directors of both companies, is expected to increase Chancellor's 1999 cash flow.
Chancellor shareholders will own 66 percent of the new company, with Capstar holders owning a 9 percent stake. Hicks, Muse will own 25 percent of Chancellor's fully diluted outstanding shares. The company now owns 15 percent of Chancellor and 59 percent of Capstar.
The combined company will consist of 463 radio stations in 105 markets, with more than 65 million listeners a week, the companies said in a press release.
Thomas Hicks, chairman of Chancellor, Capstar and chairman and CEO of Hicks Muse, will serve as chairman of the combined entity.
Chancellor CEO and President Jeff Marcus will retain those posts at the combined entity.