CBS, Viacom to combine in all-stock merger to create ViacomCBS
The combined company, ViacomCBS, “will be a leading global, multiplatform, premium content company, with the assets, capabilities and scale to be one of the most important content producers and providers in the world,” the companies stated.
Bob Bakish, President and CEO, Viacom, will become President and Chief Executive Officer of the combined company.
Joe Ianniello, President and Acting CEO, CBS, will become Chairman and CEO of CBS and will oversee all CBS-branded assets in his new role.
The merger agreement was approved by the boards of directors of both CBS and Viacom by unanimous vote of those present, upon the unanimous recommendations of the Special Committees of the CBS and Viacom Boards of Directors, respectively.
Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis.
Under the terms of the merger agreement, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively.
NAI, which holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively, has agreed to deliver consents sufficient to assure approval of the transaction.
More than two-thirds of the CBS directors unaffiliated with NAI, and all of those unaffiliated directors who voted on the transaction, have approved the transaction, as required in order to permit NAI to consent to the transaction under the terms of the 2018 settlement agreement entered into among CBS, NAI and certain other parties thereto.
The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the 2019 calendar year end.
Sumner Redstone is the majority owner and chairman of the board of the National Amusements (NAI) theater chain. Through National Amusements, Redstone and his family are majority voting shareholders of CBS Corporation and Viacom (itself the parent company of Viacom Media Networks, BET Networks, and the film studio Paramount Pictures). Redstone was formerly the executive chairman of both CBS and Viacom.
Bernstein analyst Todd Juenger downgraded CBS (CBS) to Underperform from Market Perform following the company’s confirmation earlier of a deal to combine in an all-stock merger with Viacom (VIAB). Any synergies produced “will pale in comparison” to inheriting Viacom’s structural problems, Juenger tells investors.
Imperial Capital analyst David Miller lowered his price target for CBS (CBS) to $62 from $72. The analyst says that while this is generally consistent with where both names had been trading for the last 90 days, the ratio is below what he had been hoping for from the Viacom side, which was a ratio of 0.7. Nonetheless, Miller keeps an Outperform rating on shares of CBS.
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