Under the stock transaction, Clear Channel (CCU), with 454 stations, would move into the top three largest U.S. radio broadcasters along with CBS Corp. and Chancellor Media.Jacor (JCOR) shareholders would own 25 percent of the newly merged company following the stock swap transaction. Clear Channel would assume Jacor debt as part of the deal.
Jacor shares fell 1 17/32 to 40 1/8 ahead of the news on Wednesday. Clear Channel slipped 3 15/16 to 37.
The exchange rate for the stock swap will be set near the close of the deal, but based on Clear Channel's $37-per-share price, each Jacor share would be converted into 1.4 shares of Clear Channel common stock.
The ratio reflects a 29 percent premium over Jacor's closing price on Wednesday.
Clear Channel said it sees the deal as immediately accretive to its post-tax cash flow.
The boards of Clear Channel and Jacor have approved the merger. Also, the Zell/Chilmark Fund, Jacor's largest stockholder with about a 27 percent stake and the Mays family with about about 15 percent of Clear Channel agreed to vote in favor of the deal. The acquisition should close by Sept. 30, 1999.
In addition to being the second largest radio broadcaster in number of stations, the deal will also result in the world's largest outdoor advertising company, with 220,000 advertising displays in 25 countries, the companies said.
Salomon Smith Barney advised Clear Channel on the merger, while Donaldson, Lufkin & Jenrette worked with Jacor.
Written By Steve Gelsi