Clear Channel Outdoor stock rose 7% yesterday on news that activist investor Anson Holdings is pushing for a sale. Clear Channel Outdoor executives have downplayed a sale of the company in the past, claiming that the low tax basis on the company assets makes a sale infeasible because too much of the sale proceeds will be diverted to income taxes.
Anson is a $2 billion activist stock and REIT investor run by Moez Kassam and Amin Nathoo which owns 18 million shares (3.65%) of Clear Channel Outdoor stock. It is Clear Channel Outdoor’s 6th largest shareholder after Pacific Invetment Management (22%), Arte Moreno (14%), Ares Management (8%) Vanguard (5%) and Legion Partners (5%).
SignValue’s take: Anson isn’t the only Clear Channel Outdoor shareholder that wants a sale. Legion Partners has pushed for a sale in the past. We think that shareholder Artie Moreno would support a sale at a decent price. We wonder if Clear Channel Outdoor assets are appropriate for an UPREIT sale to Lamar. In an UPREIT transaction the new holder of the shares receives current Lamar dividends and does not pay tax until they sell their shares. Lamar paid 12.5 times Billboard Cash Flow (BCF) the last time it bought a group of Clear Channel Outdoor assets. Lamar closed a $400 million private placement this week and has more than $800 million in liquidity with which to do acquisitions. Clear Channel’s traditional billboards would have a much higher market value, and the transit assets would have a lower value (and interest level) from prospective buyers.
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