As anticipated Wednesday, Sumner Redstone's National Amusements Inc on Thursday urged the boards of Viacom Inc and CBS Corp to explore a combination.
National Amusements owns 80 percent of the voting shares of both media companies, which separated from each other 10 years ago.
The optimal deal structure would be an all-stock transaction in which the stockholders of each company would receive shares in the combined company of the same class as they currently hold, National Amusements said in a letter to the companies' boards.
Reuters reported on Wednesday that National Amusements, owned by media baron Redstone and his daughter Shari Redstone, could contact CBS and Viacom as soon as this week to ask them to form independent board committees to discuss a potential merger.
Here is the complete letter from Sumner Redstone:
Members of the Boards:
We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape.
As a result, we would like both companies’ boards to consider a potential combination of the companies. Our tentative view is that the optimal structure would be an all-stock transaction in which the stockholders of each company would receive shares in the combined company of the same class as they currently hold.
We therefore request the board of each company take the appropriate steps to consider the proposed transaction. We believe that any transaction should be the result of full and fair deliberation and negotiation, and that any transaction would proceed only if it is approved by each board. None of Sumner M. Redstone, Shari E. Redstone or David R. Andelman will vote as directors on the consideration of this matter by either company’s board, and none will participate in any of the related deliberations.
To avoid any doubt, National Amusements is not willing to accept or support (i) any acquisition by a third party of either company or (ii) any transaction that would result in National Amusements surrendering its controlling position in either company or not controlling the combined company. We believe moving forward expeditiously, but with due care, is important and we are prepared to be of assistance to the two companies as they explore this possibility.
NATIONAL AMUSEMENTS, INC.
By: /s/ Sumner M. Redstone
Chief executive officer