Dan Primack tallies the scorecard for the seeming endless Clear Channel saga. Among the winners: Bain Capital and THL Capital. Among the losers: Clear Channel shareholders and Dan himself:

“I was told there would be a trial, and now all I’ve got is a press release and background briefings. It’s an empty feeling, and entirely inconsequential outside of the home office.”

Click here for the full post.

A Bear Stearns-like meltdown in January?

That’s what the star banker who advised the fallen Wall Street bank on its sale to rival JPMorgan says would have happened if the much reviled sovereign wealth funds had not stepped in with so much cash last year.

“Imagine where we would have been in our financial system, if in November, in December, in January, sovereign wealth funds hadn’t been there?” said Gary Parr, deputy chairman of Lazard. “We would have been hit with a Bear Stearns type situation three months earlier.”

Sovereign wealth funds have reduced their level of investments significantly due to the confluence of factors, including a backlash by shareholders of companies in which they invested and a pushback by government, Parr said at The Deal’s Fifth Annual Private Capital Symposium.

Investments by sovereign wealth funds fell to about $13 billion in the first quarter, down from $44 billion in the fourth quarter of last year, Parr said. The funds, which had more than $2.8 trillion in 2007, are growing fast.

Parr declined to go into details of what happened around the fire sale of Bear Stearns earlier this year, citing litigation around it.

“In the span of two days … money market funds decided, ‘I don’t want to hold this name anymore,’” Parr said. “None of us have ever seen anything like this.”

“There was a run on the bank,” Parr said. “It was quite extraordinary.”

Photo credit: Reuters

The market is dealing its own brand of justice on Wall Street for the follies and excesses that led to the credit crunch and individuals who took part in it are paying the price, says veteran dealmaker Kenneth Moelis.

“There is a full-on depression in financial services,” Moelis said at The Deal’s Fifth Annual Private Capital Symposium in Manhattan.

“People measure pain differently, but losing your job is no fun from any position you are at,” Moelis said. “Financially people are getting hurt.”

The chief executive of Moelis & Co said he was “not a big fan of the rush to regulate,” and the market was holding deal advisers accountable.

“If you think you got bad advice … it is up to the users of bad advice to discipline appropriately,” he said. “There is a lash-back on the big financial conglomerates.”

Moelis also said relationships in the business were not what they used to be when he started out.

“People say, ‘the relationships are ending.’ I have the question, ‘did the relationships ever begin?’”  Moelis said, when asked if aborted LBOs would sour partnerships between advisers and private equity companies. “I think that personal trust did go away.”

The Clear Channel deal may seem like the longest, most drawn out LBO ever, but at least it looks like this time it could be the end of the drama.

One big safeguard in the new agreement is that the banks and the private equity buyers have agreed to put all their equity and debt obligations into escrow within ten and seven business days.

As Clear Channel’s CEO Mark Mays notes, this greatly increases the certainty that the deal will close.

It’s a pretty unusual state of affairs though.

“Look at this in the context of the litigation history here, there’s no small amount of distrust between the company, the sponsors and the lending group,” said Joel Greenberg, partner and co-chair of law firm Kaye Scholer LLP’s Corporate and Finance Department, who described the escrow arrangement as “about as secure as you can get”.

Given the history of the Clear Channel deal — a bidding battle, shareholder pressure forcing the price up twice, quirky offerings like stub equity, litigation and courtroom drama – almost nothing could surprise anymore about this deal.  

But unless shareholders upset the applecart when it goes to a vote this summer, this could, at last, be the final cut.
 

Just when it looked as if Yahoo chief Jerry Yang might keep his house in order, billionaire investor Carl Icahn looks set to crash the joint. A source close to the matter said the veteran corporate raider has built up a stake in Yahoo in the last week and plans to run a slate of proxy directors in an effort to force the company back to the negotiating table with Microsoft. It is unlikely that Icahn will join with other hedge funds in the campaign, the source added.

Singapore Airlines has invited offers for its 49 percent stake in Richard Branson’s Virgin Atlantic. The world’s second-biggest airline by market value bought the stake from the British billionaire in 1999 for 800 million pounds ($1.6 billion). “It’s not a secret that we regard it as an underperforming investment. We are still reviewing our plans and are open to all reasonable offers,” Singapore Airlines Chief Executive Chew Choon Seng said. “But as they say in classified ads: No timewasters, please.”

The protracted dispute over the leveraged buyout of U.S. radio operator Clear Channel Communications ended late yesterday as the parties reached agreement to settle the litigation and struck a new deal at a lower price of $17.9 billion. It brings to an end court battles between the private equity buyers, Clear Channel, and the banks which agreed to finance the deal when lending was more lucrative. The new deal will see Thomas H. Lee Partners and Bain Capital pay $36 a share to buy the radio operator, as opposed to the $39.20 they agreed at the peak of the private equity boom last year.

U.S. drugmaker Pfizer is exploring acquisition possibilities in the German biotech sector and has held talks with the management of Munich-based MediGene, two industry sources said. MediGene shares rose 13 percent to 6.3 euros after the news, valuing the group — which specialises in cancer treatment — at around 210 million euros ($325 million). For Pfizer, the world’s biggest drugs company, MediGene would be an easily digested acquisition and the New York-based company has a past history of buying up smaller companies with promising products or technologies. Pfizer Chief Financial Officer Frank D’Amelio said Pfizer’s recent focus was on smaller transactions, and he did not feel obliged to buy mid-size drugmakers, in the $10 billion to $15 billion price range, as some analysts have urged.

TomTom, the world’s biggest maker of car navigation devices, won unconditional permission from the European Commission to buy its main map supplier, Tele Atlas, for 2.9 billion euros ($4.5 billion). U.S. authorities cleared the deal last year.

Tesco, Britain’s biggest retailer, is buying 36 discount stores from South Korea’s E-Land for $1.9 billion — its biggest single acquisition to date. Tesco, like global rivals Wal-Mart and Carrefour, is seeking to expand in fast-growing international markets to offset slowing growth at home. South Korea is Tesco’s second most profitable market after Britain.

Other deals of the day:

* SK Telecom, South Korea’s top mobile operator, said it was holding preliminary discussions with Virgin Mobile over SK’s U.S. mobile business Helio.

* Hunan Nonferrous Metals Corp, China’s top zinc producer, plans to pay up to $77 million for control of Abra Mining, an Australian lead, zinc, gold and silver mining firm in which it already has a 17.8 percent stake.

* Russia’s former electricity monopoly will sell the government’s 29 percent stake in power producer TGK-11 to engineering firm E4 Group, sources close to the sale told Reuters.

Even though shareholder activism is on the rise and hostile deals are expected to grow, global poison pills that are in force have steadily declined over the past six months, according to Thomson Reuters Strategic Research.

The report says there were 1,320 pills in force as of March 31, down nearly 12 percent from September. Companies are letting their plans expire at a faster pace than those who are adopting and renewing plans.

“This could be in response to an unfavorable deal-making environment sparked by the credit crunch and companies may not be concerned that they are a target at the present,” the report said.

The United States, however, has been seeing increased shareholder activism. The data reflects that trend: Nearly 87% of the pills currently in-force are U.S. based companies.

The report also said there have been no pill adoptions this quarter from the 2007 Fortune 500 roster.

No first-time pills have been adopted. No pills have been renewed. Eight pills quietly expired during the first quarter of 2008.

“Larger U.S. corporations continue to steer clear of the poison pill as a means to protect the company from unwelcome shareholders and are willing to take the risk that an unwelcome bidder could take a meaningful position. This year there has been no pill activity in Fortune 500 names except allowing the expiration of existing plans. Pressure from shareholders, concerns of corporate governance image, and a subdued M&A market likely played a role in company’s decision to abstain from renewal and adoption.

Companies considering the adoption, renewal, or expiration of poison pills should consider these steps:

• How your shareholder base will react if a change to a poison pill policy is made.
• Find out the voting guidelines used by investment advisors regarding poison pills.
• Carefully weigh the pros and cons of poison pill adoptions.”

Nearly 51% of the existing poison pills in-force worldwide are up for expiration over the next three years. There was a wave of new plans that flooded the market in the late 1990s and most plans have an expiration of ten years from the time of adoption. Over one third of the outstanding pills in-force are up for expiration for the remainder of 2008 and all of 2009.

Earlier this year, data from research firm FactSet SharkWatch indicated that some industries are affected more than others when it comes to shareholder activism.

That data - which measured the percentage breakdown of the 501 campaigns in 2007 by sector - revealed why it may be better to be a non-energy minerals company than a bank if you want to steer clear of trouble.

Forgive Wes Edens, CEO of Fortress Investment Group, for being a bit tetchy these days.

His publicly traded investment group posted a first quarter net loss of $69 million, compared to gains of $62.1 million a year earlier, as the markets pummeled its public stock holdings, among other factors. And its share price has fallen by half since it listed just over a year ago on the New York Stock Exchange.

So when an analyst pointed out on last week’s first-quarter earnings call that FIG’s public portfolio holdings fell from $7.8 billion just over a year ago to $765 million now - a $7 billion decline - Edens struggled to avoid using the dreaded “L” word, for loss. Most of the decline, he said, was “a reduction of market value,” or maybe an “unrealized” loss, since it continues to hold most of the assets, having sold only around $1.5 billion of them.

“I think that the use of the word loss in this case is pejorative and actually not at all accurate,” sniffed Edens to Rashad Fonti, analyst from Citigroup, whose bank - like most others - has used the word “loss” all too often in recent months in describing its performance.

Edens, a hedge fund guy who has evidently not gotten used to running a public company and being subjected to pesky analyst questions (or worse, media questions), took umbrage when Fonti basically said the company had failed its investors by not selling the stock holdings before the market turned last year. (Underlying message: how smart are you overcompensated hedge fund guys anyway?)

“You were almost $8 billion, (and now) you’re down to less than a billion dollars,” said Fonti, according to a transcript of the call. “You didn’t take the gains. The money was lost.”

That was all a bit much for Edens, who basically said the market is wrong in its valuations. “It’s actually not a loss as long as we still own the investment, right? And since we have investments in companies that we think have a tremendous amount of value, it’s a mark-to-market issue.”

Right. Those markets have a way of getting it all wrong. And hey, while we’re at it, who needs this quarterly numbers stuff anyway? We’re a long-term business. Get it?? LONG-TERM. And you analysts should be happy we give you any insight at all. Now go back and rework your models…

“We don’t really measure our company on a quarterly basis,” Edens told the analysts, as part of a discussion over whether it may change its dividend to adjust for ups and downs in performance. “We have quarterly conference calls like this to give you insight into how the company is doing, but we really look at the company in the aggregate in the long term.”

“Having some sort of knee jerk reaction to a quarter is not the right thing to do.”

Well, that settles that.

Investor reaction to Hewlett-Packard’s bid for technology outsourcer Electronic Data Systems has been less exuberant than you might expect for a $12.6 billion tech deal these days. The $19 billion Compaq purchase in September 2002 came shortly after HP touched its life-time low share price under $10 per share. The stock then proceeded to double in value to over $20 by the end of the year. HP shares fell nearly 5 percent late yesterday as perceptions of EDS as a lumbering fixer-upper did not merit a premium of as much as around 40 percent. “Unless HP has some synergies where they can dramatically impact earnings growth of EDS, I’m not sure why they’d want to buy it,” said Jim Huguet, co-chief executive at Great Companies LLC. The party may still be coming, though, as the deal is seen sparking M&A in the IT services industry.

French bank Credit Agricole joined the growing list of lenders asking shareholders for billions of euros in extra cash while a trio of other European banks also revealed new scars from the credit crunch. Agricole, France’s biggest retail bank, announced a 5.9 billion euros ($9.1 billion) rights issue due to further writedowns at its Calyon investment banking arm of 1.2 billion euros during the first quarter. French rival Societe Generale, Belgian-Dutch group Fortis and Britain’s Alliance & Leicester also revealed combined writedowns of almost $3 billion as the impact of the U.S. housing market crisis and subsequent credit crunch spread further across Europe. After taking big hits, banks are asking shareholders to rebuild their capital cushion as the threat of further losses looms and banks’ ability to rebuild their balance sheet will be hampered by reduced earnings in coming years.

Westpac Banking launched a $17.6 billion all-share bid for smaller rival St George Bank in a tie-up that would create Australia’s biggest bank by market value. Analysts said the deal could trigger further consolidation in an Australian banking sector that, while dodging the worst of the subprime crisis, is still grappling with higher funding costs since the onset of the global credit crunch last year. Gail Kelly, Westpac’s chief executive who joined the bank less than four months ago after heading up St George for nearly six years, noted 2008 had brought a new world. “I left St George in August last year. That was a different time. Challenges in financial markets (are) very materially different now from then,” Kelly told journalists.

Finmeccanica of Italy has agreed to buy U.S. military contractor DRS Technologies in a $4 billion deal, the biggest so far in the European defense contractors’ bid for a slice of the growing U.S. weapons market. Finmeccanica said it would pay $81 a share in cash for DRS, a premium of about a third over the 30-day moving average of DRS’s stock price. Finmeccanica is 34 percent owned by the Italian state, and said it would pay for the purchase through a loan to be repaid through a capital increase, a bond issue and an asset sale. The cash price for DRS offers a premium of 32 percent over DRS’s 30-day average stock price. Finmeccanica plans to delist DRS, a maker of radar and surveillance equipment.

Corporate Express says it is willing to talk to U.S. office supplies retailer Staples after it raised its offer for the Dutch business products wholesaler. Staples raised its offer by more than 10 percent to about 1.46 billion euros ($2.3 billion), which Corporate Express has repeatedly rejected as too low. The Dutch firm said in a statement it was willing to talk to Staples about the revised offer and did not reiterate that Staples’ offer undervalued the company. Analysts said Staples may have to raise its bid again.

Other deals of the day:

* Emirates Telecommunications may compete with Mexican billionaire Carlos Slim and Russia’s Altimo for a $1 billion stake in India’s Tata Teleservices, al-Khaleej newspaper reported.

* Austrian vaccine maker Intercell bought Iomai Corp of the United States in a deal worth $189 million and also cut its first-quarter net loss.

* British credit information firm Experian said it had set up a 50-50 joint venture with Central Communication Bureau, a consumer credit bureau in Japan.

* Bank of Georgia, Georgia’s largest bank by assets, agreed to pay $34.2 million for a 70 percent stake in Belarusian Narodny Bank.

Fidelity Investments and some other U.S. asset managers with big money market funds can breathe a sigh of relief.

Boston-based data provider Financial Research Corp. (FRC)  has decided to stop providing fund flows data to the media that identifies companies by name — figures that while closely watched were a source of constant irritation to some firms.

News reports based on the monthly data by FRC, part of Citigroup, had rankled Fidelity and some other fund companies because the figures excluded money market fund flows and only included flows of stock and bond funds.

Over the past few years, Fidelity and other asset managers reported robust inflows into money market funds but received bad press because the FRC data excluded those figures.

For example, FRC numbers showed that Fidelity saw outflows of $9.9 billion in January.
But the world’s biggest mutual fund company reported inflows of $14.4 billion that month, driven by money market fund inflows of $20.3 billion.

That nuance was often lost in headlines focusing on FRC’s bond and stock fund flow data — figures that had become industry benchmarks.

Putnam Investments, the Boston-based unit of Canada’s Power Financial Corp, has regularly topped FRC’s list of companies seeing the biggest outflows.

FRC may provide the firmwise data to companies as a paid service.

Other companies which track fund flows include Strategic Insight, Emerging Portfolio Fund Research and Lipper Inc, a unit of Thomson Reuters.

Photo credit: Reuters

It looks like Norman Pearlstine couldn't resist the glamorous life of journalism. After two years in the private equity business at the Blackstone Group Carlyle Group (D'oh!), Pearlstine is joining Bloomberg LP as "chief content officer," where, as Bloomberg said in a press release, he will work with "Editor-in-Chief Matthew Winkler to seek growth opportunities for its
television, radio, magazine and online products and to make the most of the
existing Bloomberg News operations."

Pearlstine used to be the editor-in-chief of Time Inc for 11 years, and before that spent 23 years at The Wall Street Journal. More details on his CV, directly from the release :

He was the paper's top news executive for nine years, serving as Managing Editor and then Executive Editor. He previously worked as the founding editor and publisher of The Wall Street Journal/Europe, the first Managing Editor of The Asian Wall Street Journal, and the Tokyo bureau chief.

Pearlstine was founder of Smart Money magazine and worked as an Executive Editor of Forbes. He is the author of OFF THE RECORD: The Press, the Government, and the War over Anonymous Sources , published by Farrar, Straus and Giroux in 2007.

We don't know what to make of this. Our immediate questions:

- Will he succeed Winkler, with whom he worked at the Journal?

- Will he put Bloomberg into M&A mode?

- Will he work on an effort to take Bloomberg LP public? (This idea has come up at least once before)

Pearlstine wasn't available for comment, so we'll just publish our questions here and invite comments, but Bloomberg's top editorial executive, Matt Winkler, did  call. Here's a bit of what we talked about:

Q: Why Pearlstine?

A: Nobody brings as much experience in so many different ways as Norm does... Our hope is that Norm can give us a lot more awareness and guidance on ways we can deliver [our news] well beyond the Bloomberg.

Q: When did you first meet him?

A: The meet-and-greet was probably in the halls of Dow Jones & Co when I arrived in 1980, and he was the national news editor at The Wall Street Journal. People would point him out to me as a really important person you ought to know, so maybe on the way to the men's room I was able to introduce myself. (They started working closely together in 1982 when Pearlstine was planning the European edition of the WSJ and asked Winkler to go to London)

Q: What do you think of him?

A: I would say that everything that I know that's worth anything in this business, the news business, I can attribute to Norm.

Q: Does his new job at Bloomberg mean that you will retire?

A: I would hope that I'm just getting started, actually.  The first 18 or so years went by really fast. I think the biggest opportunities are ahead of us. I can't wait to go at them with Norm at my side.

Q: By the way, is there a hiring freeze at Bloomberg?

A: Not exactly. The management committee at Bloomberg... saw what was unfolding with the financial world -- they could see what was coming last July -- and said, 'what we want to do for the coming year is effectively freeze the headcount.' (This does not mean that they are not hiring as people leave, however) We're determined to find and identify and bring to Bloomberg the most talented, skilled journalists we can.

(Reuters photo shows Pearlstine on the left in his role as president of the American Academy in Berlin, German Chancellor Angela Merkel in the middle and former U.S. ambassador to Germany Richard Holbrooke on the right.)

(Disclaimer that you've probably read before: Bloomberg and Thomson Reuters are competitors in providing financial news and data.)