Market Not Buying Recent Buyout Deals
from the about-that-offer... dept
It’s easy to forget that just because a buyout has been announced, there’s no guarantee that it will actually go through. Pending private equity deals are particularly vulnerable at the moment, because they’re all debt financed. One good way to get a sense of whether the market is expecting a given to go through is to look at the current market price of a stock compared to the buyout price. The wider the gap, the less likely it’ll actually happen. These gaps are getting pretty wide on a number of deals, including a few discussed here. The purchase of Clear Channel was announced last November, but today the stock trades at 37% below the offering price. Alltel is in a similar boat, trading 22% below the buyout price, which was just announced in May. It’s still possible, of course, that both of these deals will get done. But if current conditions persist, we may see them hang around in their current form for a bit longer.