(Bloomberg) -- Activist investor Legion Partners Asset Management is urging billboard operator Clear Channel Outdoor Holdings Inc. to accelerate asset sales and consider selling the entire company to boost its stock price.
Legion, which has been investor since 2021, wants Clear Channel Outdoor to accelerate the sales process for its operations in Northern Europe and begin a sale of its Latin American business, according to a letter Tuesday to the company’s board.
Legion, which owns a 5.1% stake in Clear Channel Outdoor, said it should also review divesting select US assets while exploring a sale of the entire company.
“We believe both financial and strategic parties could be interested in acquiring the entire company, with potential regulatory hurdles solvable through divestitures and/or partnerships,” Legion managing directors Chris Kiper and Ted White said in the letter, which was reviewed by Bloomberg News.
Legion is now Clear Channel Outdoor’s fifth largest equity shareholder, according to data compiled by Bloomberg News
Clear Channel Outdoor’s board and management welcomes “constructive conversations” with shareholders, including Legion, the company said in a statement.
“The board and management are taking meaningful action to enhance the company’s strategic position and improve its capital structure, including through our ongoing review of alternatives for our European businesses and evaluating a range of other strategic opportunities to enhance value,” the company added.
Describing itself as one of the “world’s largest out-of-home advertising companies,” Clear Channel Outdoor had more than 500,000 print and digital displays in 23 countries at the end of 2022, according to its annual report. That includes billboards for well-known brands such as McDonald’s, Coca-Cola and T-Mobile, an investor presentation from September showed. It competes with France’s JCDecaux SE and Outfront Media Inc.
Clear Channel Outdoor’s stock fell as much as 20% on May 9, after reporting revenue for the first quarter that met the average analyst estimate but still disappointed investors. The stock, which is down 42% in the past year, fell 3.6% to close at $1.07 Tuesday in New York trading, giving the company a market value of about $517 million.
While Clear Channel Outdoor has “an enviable footprint of marque assets,” its shares have underperformed in recent years because it has too much debt and its “conglomerate structure” that confuses to investors, Legion said.
The company has said it had about $5.6 billion in total debt as of March 31.
“These issues appear to have hampered the public markets’ ability to understand the intrinsic value of Clear Channel’s assets, which we believe is significantly higher than what is implied by CCO’s current stock price,” Legion said.
Clear Channel Outdoor was majority owned by iHeartMedia Inc. before fully separating in 2019, after the radio broadcaster went bankrupt.
Legion, an activist fund focused on small-cap targets based in Los Angeles, has pushed for changes at SurveyMonkey parent Momentive Global Inc. and apparel maker Guess? Inc.
(Updates with Clear Channel comment starting in sixth paragraph)
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