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None of your business

The Clear Channel deal is just the latest in a line of companies deciding that being publicly traded is becoming too big a headache.

By Scott Barancik
Published November 17, 2006


Suddenly, publicly traded companies are hot.

Hot to go private, that is.

America's financial markets are awash in deals to take public companies private. On Thursday alone, No. 1 radio broadcaster Clear Channel Communications said it would retire its stock after 22 years; the publisher of Reader's Digest unveiled its own going-private deal; and No. 1 hospital chain HCA completed its previously announced plan to ditch Wall Street. Others unveiling going-private plans this month included OSI Restaurant Partners, the parent of chains like Outback Steakhouse and Carrabba's Italian Grill, as well as Boca Raton's RailAmerica and the Four Seasons hotel chain.

There are good reasons for the going-private boom.

One is stock prices. Though most investors may curse today's anemic gains - the S&P 500 index remains 8.6 percent below its March 2000 peak - private investment funds and well-to-do clients call them a bargain.

"There is just a lot of money searching for higher returns today, and it's perceived that the place to be is in the buyout space," said InTrust Advisors managing director Jeffrey Diercks, whose Tampa company helps wealthy clients invest in hedge funds.

All told, 79 U.S. companies have announced going-private deals totaling $211-billion this year, according to Dealogic. There were 45 deals worth a total of $58.6-billion in 2005, and 30 deals worth just $9.6-billion in 2000, when record-high stock prices made going-private deals unaffordable as well as unnecessary.

HCA's $32.7-billion buyout and Clear Channel's $26.7-billion deal are the two largest since at least 1995.

Private investment funds like Bain Capital Partners - which is involved in the HCA, Clear Channel and OSI buyouts - aren't interested in just any company. They seek companies with lots of cash, a supply of real estate and relatively modest debts. They also like mature companies whose top executives are highly skilled, willing to stick around, and are sick of smothering regulators, mercenary class-action attorneys, impatient investors and nihilist news reporters.

Outback owner OSI is a model target. Though going public enabled its co-founders and early backers to earn hundreds of millions of dollars, staying public has been tough. The fiercely free-market advocates have had to contend not only with Sarbanes-Oxley and other rules aimed at preventing frauds, but activists who hijack its annual shareholder meetings demanding more humane chicken-killing methods and a complete disclosure of political contributions.

But for some companies, going private today doesn't preclude another IPO tomorrow. That's what happened to rental-car company Hertz, which went public Thursday at $15 a share, little more than a year after several investment funds took it private.

HCA has had a similar, if lengthier, arc. The company went public in 1969, was taken private in 1988, and issued another IPO in 1992 before funds took it private Thursday.

Staff researcher Angie Drobnic Holan contributed to this report. Scott Barancik can be reached at or (727) 893-8751.

[Last modified November 16, 2006, 23:43:17]

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