bloggingbuyouts

There was a large move of almost 6% today in shares of Clear Channel Communications (NYSE: CCU). There was a note that a trial is being set from yesterday, but the talk out there today was that this was soon going to be a done deal.

The truth is that this one has been like watching a soccer game and is still in the pending stage with a suspiciously wide arbitrage spread. Even after a large move up today and even with a large move from the high $20's in early February, the spread here is still huge in the deal from Bain Capital and Thomas H. Lee Partners LP for $39.20.

It is wide enough that it still should bring more questions than answers. At a $33.68 close, this one has a merger arb-spread of some 16.3 percent. That isn't as high as it has been, but it is still questionable. I have been questioning this along with other failed deals even though this one is still in the "pending" status.

There are two words come to mind here: speculation, or rumors. This one is still a head scratcher. For whatever it's worth, if this closes it may be the last or one of the last giant club deals in private equity buyout land. Every time this one is discussed, the opinions vary wildly.

Harrah's (NYSE: HET) volatility Elevated as Arbitrage spread widens. HET is recently up $1.53 $81.70. HET accepted a $90 share bid from Apollo/Texas Pacific Group on December 19; the deal is expected to close in late 2007. HET November option implied volatility of 23 is above its 26-week average of 13 according to Track Data, suggesting larger price risks.

Hilton (NYSE: HLT) volatility Elevated as Arbitrage spread widens. HLT announced on July 3 that The Blackstone Group (NYSE: BX) would acquire all the outstanding common stock of HLT for $47.50 per share. HLT is recently trading down 64 cents at $43.66. BX expects the deal to close before year end. HLT October option implied volatility of 27 is above its 5-week average of 16 according to Track Data, suggesting larger risk.

Clear Channel (NYSE: CCU) implied volatility increases as Arbitrage deal spread widens. CCU is recently down $1.30 to $34.04. Thomas H. Lee Partners and Bain Capital are expected to close on their $39.20 cash bid for CCU in late 2007. CCU October option implied volatility of 30 is above its 26-week average of 17 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Lew Dickey started up Cumulus Media (NASDAQ: CMLS) back in 1997. Before this, he founded Stratford Research in 1985, a top research firm focused on the radio and television markets. He even wrote a book: The Franchise - Building Radio Brands.

But his biggest deal was Cumulus, where he arranged more than 130 acquisitions to build a powerhouse in radio.

Yet, with private equity dollars flowing, Dickey has now decided to do a buyout . He has partnered with Merrill Lynch Global Private Equity (NYSE: MER) for the $1.3 billion deal.

The radio sector has seen a lot of dealmaking. For example, there's the $19.5 billion buyout of Clear Channel Communications (NYSE: CCU).

While the internet may pose some threat, investors are still convinced of the future of traditional radio. And the cash flows are fairly predictable (making it easier to get debt financing).

On the news of the deal, Cumulus' shares spiked 32.74% to $11.11. The buyout offer is $11.75.

If you want to check out some more recent M&A transactions, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

CNBC's David Faber is reporting that Bain Capital and Thomas H. Lee Partners are prepared to raise their offer for Clear Channel Communications (NYSE: CCU) to $39 per share, up from the current bid of $37.60. The shares closed yesterday at $36.72, the small discount indicating that many investors expected the private equity groups to sweeten the deal.

It remains to be seen whether the relatively modest increase of less than 4% will be enough to persuade investors to accept the deal. Calpers, which owns 3.3 million shares of the company, has voiced its opposition to the deal. I would be surprised if this $39 offer is the end of it. Based on the level of resistance to the $37.60 offer, I doubt such a small increase is enough to assuage the concerns of investors.