NEW YORK (Reuters) - Clear Channel Communications Inc. (CCU.N), the No. 1 U.S. radio station operator, said on Thursday it had agreed to be taken private in a $18.7 billion buyout by the founding family and equity firms Thomas H. Lee Partners (THL.UL) and Bain Capital Partners LLC.

Clear Channel, which also said it plans to divest 448 of its 1,150 radio stations, is selling at a time when the radio advertising market is weak, and listeners are migrating to digital music, Internet media and satellite radio.

The Mays family, which includes Mark, Randall and founder Lowry Mays, is participating in the buyout, but the financial details were not immediately available. Mark Mays will continue as chief executive, and Randall will be president and chief financial officer. Chairman Lowry Mays will continue in an active role, the company said.

The private equity firms, which have also pursued other large media properties this year, agreed to buy Clear Channel for $37.60 a share, a 16 percent premium to the $32.35 closing share price on October 25, when the company said it was looking at strategic alternatives.

Bain and Thomas H. Lee will be equal investors in Clear Channel. The company said no significant layoffs are expected.

Clear Channel shares closed up 3.6 percent at $35.36 on the New York Stock Exchange.

COMPETING BIDS

Two teams of private equity bidders had submitted offers, sources told Reuters. The other consortium included Providence Equity Partners, Blackstone Group (BG.UL) and Kohlberg Kravis Roberts (KKR.UL). Blackstone declined to comment. KKR and Providence were not immediately available.

Clear Channel can still solicit competing bids from third parties through December 7, and then negotiate until January 5. If the company accepts a superior proposal, it would be required to pay a break-up fee to Bain and Thomas H. Lee.

Some analysts said they doubted a competing offer would emerge since the auction had been well-publicized and only attracted two bidding groups.

"The price is compelling enough for shareholders to likely conclude that an outright sale of the company is likely to unlock as much value as any other alternative, such as a restructuring," said RBC Capital Markets analyst David Bank.

"The only thing that can be a concern is that Thomas Lee is involved in a lot of other media properties so closing could take longer than expected. I can't imagine that they didn't vet this with regulators though," Bank said.

Thomas H. Lee was part of a group that agreed to buy Univision Communications Inc. (UVN.N) in September for more than $12 billion.

"We should expect some bumps along the way, but we don't expect it (regulatory scrutiny) to block the deal," said Jerry Paul, portfolio manager with QCM Absolute Return Fund.

The radio stations earmarked to be sold are located outside the Top 100 U.S. media markets. Also to be sold is Clear Channel's 42-station television station group.

"You might see them have to divest some stations from other big-city markets" to win approval from regulators, said Paul, whose fund owns shares of Clear Channel.

The planned divestitures do not depend on the larger buyout going through. The company already has received unsolicited interest for those assets, sources familiar with the situation said.

Debt-rating agencies Fitch Ratings and Standard & Poor's cut Clear Channel's credit ratings to junk following news of the deal.

"Although the company has not announced specific financing terms of the new capital structure, we would expect a marked increase in leverage, which is likely to result in even further ratings downside potential," S&P said in statement.

OUTDOOR BUSINESS DRAWS INTEREST

Stifel, Nicolaus & Co. analyst Kit Spring said the deal values Clear Channel at 11.3-times EBITDA (earnings before interest, taxes, depreciation and amortization), which is below smaller but similar radio deals that fetched prices of 13-times

EBITDA.

"We believe shareholders should reject the initial offer," Spring said. Clear Channel's "assets could command a much higher price if sold piece by piece."

Clear Channel also owns a majority stake in outdoor advertising group Clear Channel Outdoor Holdings Inc. (CCO.N). The deal does not include a provision for taking Clear Channel Outdoor private or selling it to another buyer.

French outdoor advertising company JCDecaux (JCDX.PA) said on Thursday it was interested in buying Clear Channel Outdoor, adding that private equity firms were aware of its interest.

"It won't be a cheap deal," JCDecaux co-Chief Executive Jean-Charles Decaux said during an investor conference. "But we think we are quite a natural buyer for most of the assets if they are for sale."

Clear Channel said its board of directors, excluding those with an interest in the buyout, and a special board advisory committee made up of disinterested directors backed the deal.

The company said the three Mays family members had agreed to reduced payments related to change of control clauses in their employment agreements.

(Additional reporting by Caroline Humer, Sue Zeidler, and Jessica Hall)

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