The bidders, Thomas H. Lee and Bain Capital, increased their offer to $39 a share from $37.60, responding to pressure from some shareholders and proxy advisory firms who had argued the earlier bid had undervalued the company at $19 billion.
While some major investors still opposed the deal for the leading U.S. radio station operator, according to sources, the increased cash was beginning to pay dividends for the bidders.
A fund manager at an investment firm that is a top-20 shareholder in Clear Channel said the increased bid meant the firm now favored the deal. The fund manager said the investment firm, which requested anonymity, had previously been on the fence about which way to vote.
But a source close to Fidelity Management & Research Co. said it would not change its plans to oppose the deal. Another source familiar with the matter said Highfields Capital Management LP would not change its plans to oppose the deal.
Fidelity owned about 9 percent of Clear Channel and Highfields has 5 percent, according to Clear Channel.
It was unclear whether the influential proxy advisory service ISS would change its decision on the deal. ISS recommended shareholders to vote against the original bid. A spokeswoman for ISS said it was monitoring the situation but declined further comment.
Bain and T.H. Lee said in a statement the new offer was their "best and final" bid. The pair said they were responding to "inquiries from various parties, and to avoid any doubt."
Clear Channel, which recommended shareholders accept the bid, delayed a shareholder vote scheduled for Thursday to May 8 in order to allow investors time to consider the new bid.
The stock closed down 49 cents, or 1.33 percent, at $36.23 on the New York Stock Exchange.
The increased bid came one day before shareholders had been scheduled to vote on the original deal, with many analysts predicting it would fail to get the votes needed to pass. Analysts said the latest offer fell short of the key $40 a share level some investors had rallied for in recent weeks.
The deal faces a particularly difficult hurdle as under Texas law it needs two-thirds of all Clear Channel's shares to be in its favor--rather than a percentage of votes cast.
It is the second time Clear Channel has moved the vote date. It had previously moved the vote to April 19 from March 21, enabling shareholders who bought shares after the original record date of January 22 to vote.
David Bank, analyst with RBC Capital Markets, said other big investors could still swing the vote.
"I think the private equity firms are hoping that with $39, the proxy advisers will go back and reassess and that they will convince all the other big investors besides Fidelity and Highfields to take the deal," he said.
In any event, analysts expect the situation to keep evolving. "Both sides will continue to posture and the soap opera continues and the plot thickens," said James Boyle, analyst with CL King & Associates.
Bain and T.H. Lee in November beat out a rival consortium in their pursuit of Clear Channel. The rival bidders included Providence Equity Partners, Blackstone Group and Kohlberg Kravis Roberts, sources said at the time.