CBS Is Planning Below-Market Bid for Viacom in Coming Days

• April 02 2018
• Lucas Shaw, Nabila Ahmed

CBS Corp. will offer less than the current market value of Viacom Inc. in its opening bid for the owner of MTV and Nickelodeon, according to a person with knowledge of the matter, showing how far apart the companies are as they explore recombining.

CBS Corp. will offer less than the current market value of Viacom Inc. in its opening bid for the owner of MTV and Nickelodeon, according to a person with knowledge of the matter, showing how far apart the companies are as they explore recombining.

CBS will propose that its chief executive officer, Leslie Moonves, run the merged company for at least two years, said the person, who asked not to be identified discussing private negotiations. The initial offer will arrive in the coming days, Bloomberg reported last week.

The two companies, controlled by the family of billionaire Sumner Redstone, split in two more than 12 years ago and are revisiting that decision as other media companies seek to grow through deals.

CBS has been preparing a bid for Viacom over the past couple weeks, seeking an accord to reunite the CBS and Showtime networks with Viacom’s Nickelodeon and MTV. Independent board members at Viacom and CBS spent the past two months considering a merger after Shari Redstone, the vice chairman of both companies, renewed her efforts to recombine them earlier this year.

Viacom is down about 1 percent since the news of a possible merger first came out in early January, while CBS is off 12 percent. Reuters first reported that CBS was preparing a below-market offer earlier Monday.

The gap in the performance between the two companies’ shares shows investors expect CBS to pay a premium for Viacom, RBC Capital Markets analyst Steven Cahall wrote in a note to clients on March 27, adding that the “industry standard” is about 30 percent.

In extended trading Monday, Viacom fell as much as 4.9 percent to $29.05, while CBS was unchanged at $50.71.