Bribery or Extortion in Clear Channel Auction?

A kind of disturbing story today related to the pending $19 billion buyout of Clear Channel by Bain Capital and Thomas H. Lee Partners. As we’ve previously discussed, the deal is being opposed by a number of major CC shareholders, who claim that the $37.60 per share pricetag is too low.

One such shareholder is Highfields Capital Management, but Dow Jones today reports that Highfields’s opposition came only after having “briefly considered the possibility of the investment firm rolling a portion of its 5% stake into the deal, presumably in exchange for lending support.” It goes on to say that other current CC shareholders now are considering a similar offer.

Why is this disturbing? Because it seems to imply that either: (A) LBO firms are essentially bribing CC shareholders in order to complete a deal; or (B) Institutional shareholders are essentially extorting LBO firms. Neither implication is positive for the continued governmental indifference in private equity affairs…