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CBS' Viacom bid signals start of deal talks

CBS is offering a below-market value for Viacom shares, according to the person, who asked not to be identified discussing non-public deliberations

Lucas Shaw | Bloomberg 


CBS submitted its bid to acquire Viacom, the owner of MTV and Comedy Central, according to a person with knowledge of the matter, opening negotiations that will decide the fate of the two controlled by the Redstone family.

A special committee of five CBS board members put together the offer, which calls for CBS management to lead the recombined company. CBS is led by Leslie Moonves, officer, and his No 2, Joseph Ianniello, chief operating officer.

CBS is offering a below-market value for shares, according to the person, who asked not to be identified discussing non-public deliberations. shares climbed following reports in early January that the again planned to explore a merger but have retreated more than 4 per cent over the past couple days on reports of the possible terms.

An independent board committee at will now negotiate with its counterpart at CBS to agree on a price and operational structure that satisfies both sides. The aim to reach a deal before they report financial results in May, though the proposal offered no fixed timetable. Viacom was trading at $29.63 in late trading Tuesday, giving the company a market value of about $12.3 billion. CBS was up 4 per cent to $52.74, valuing the equity at $20.2 billion.

Billionaire split CBS and Viacom in 2006, believing Viacom would be more valuable trading on its own.

Yet Viacom’s suite of cable networks have sputtered in recent years and the stock has declined, while CBS has fared better, prompting Redstone’s daughter, Shari,to push for a reunion of the two properties.

“There is a clear bias for a deal to get done,” John Janedis, an analyst with Jefferies Group, wrote in a note Monday. “The challenges on the traditional distribution models are all very real.” However, bidding below market value “would would make it very difficult to consummate a deal.”

First Published: Thu, April 05 2018. 03:25 IST