The board of directors at Clear Channel Communications (NYSE: CCU) finally decided to endorse a $19.35 billion buyout package that is nearly identical to the one it rejected last month. Bain Capital (founded by Republican presidential hopeful Mitt Romney) and Thomas H. Lee Partners won with an offer of $39.20 per share, up from the $39 offer the board rejected in April.
A vote of two-thirds of shares will be required to approve the deal and, with the support of the company's major investors, it appears to be a shoe-in. But I wonder why the deal finally got done. The very minor changes to the terms don't seem like they should have been enough to make the deal a good one for shareholders if it wasn't before.
This may be a case of the "sunk-cost fallacy" or perhaps Clear Channel's management and the private equity firms had became "pot-committed." Like a poker player who has already dumped most of his chips into the pot and finds it difficult to fold, both sides had spent so much time and money working on the deal that it may have been inevitable.