SFX has announced a settlement with its Class A shareholders following negotiations over a proposed merger with Clear Channel Communications. The shareholder agreement signals a clear path for the merger, which should be finalized in the third quarter of this year.
The company reports that Class A shareholders have settled their suit and agreed to previously announced terms for the merger with one change in their favor: SFX will ante up an additional $34.5 million fee, to be paid "in cash or Clear Channel common stock."
On Feb. 29, radio broadcaster Clear Channel Communications said it was purchasing SFX in a stock swap valued at $4.4 billion. The price included $1.1 billion in SFX debt.
At that time, SFX's Class A shareholders learned that they were to have received 0.6 shares of Clear Channel common stock for each of their SFX shares, while Class B stockholders were to have received a straight one to-one trade, one Clear Channel stock for every SFX stock.
On May 16, SFX announced its May 12 filing of a preliminary proxy statement with the Securities and Exchange Commission "relating to its proposed merger with a subsidiary of Clear Channel Communications." That May 16 statement from SFX read, in part: "[SFX] disclosed that it had entered into a memorandum of understanding with counsel for the plaintiffs in the lawsuits filed in the Chancery Court of Delaware against SFX, its directors and Clear Channel Communications by holders of SFX's Class A common stock. With the filing of the preliminary proxy statement, the settlement of the shareholder litigation, and the previously announced early termination of the statutory waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, all major obstacles to the pending merger have been cleared. Assuming approval of the transaction by SFX's stockholders, the merger is expected to be consummated early in the third quarter of 2000."
A Delaware Court already consolidated the SFX shareholder lawsuits and had appointed joint counsel representing all plaintiffs. The memorandum of understanding was the result of extensive discussion and negotiation, SFX said. The deal also provides for a "complete release of all claims under state and federal law against the defendants that have been or could have been asserted relating to the transaction," which is essential to SFX's plan to pursue the Clear Channel merger.
Now in the midst of a prolonged acquisition program, SFX develops and manages touring Broadway shows, and sells Broadway subscription series and individual productions in 55 markets. An integrated franchise that promotes and produces a broad variety of live entertainment events locally, regionally and nationally, SFX has 122 venues overall, and owns or operates venues in 31 of the top 50 domestic markets.
Once Clear Channel finalizes two outstanding deals-- its $14 billion deal to purchase AMFM and the subsequent $4.4 stock swap deal for SFX -- the company will operate a total of 874 radio and 19 television stations in the United States and will have equity interests in over 240 radio stations around the world. In its other significant business, Clear Channel operates more than 550,000 outdoor advertising displays,including billboards, street furniture and transit panels.
-- By Murdoch McBride