Viacom Rejects Lowball Bid From CBS

UPDATE 4/4/18 10 AM: A below-market bid for Viacom by CBS was immediately rejected, reports CNBC citing sources familiar with the situation said.

Viacom will now propose a counter offer to CBS. The owner of Nickelodeon and MTV networks believes it deserves a market premium and sees cost synergies of at least $1 billion in the combination, according to sources.

The offer was delivered orally on Friday, these sources said. The CBS offer is 0.55 shares for each Viacom class B share. Viacom believes a "market price" ratio would be more like 0.62.

As reported by CNBC Tuesday, one point of contention with the deal is the executive slate that will run the combined company. Both sides appear to aggree that CBS CEO Les Moonves should run the entity and he will remain at the company for at least two years. However, Moonves wants to pick his own No. 2 and favors Joe Ianniello, the chief operating officer of CBS. But Viacom and CBS controlling shareholder Shari Redstone favors Viacom CEO Bob Bakish in that role.

Earlier Posting...

CBS Corp. has made an offer to acquire Viacom Inc. and the bid is contingent on its management team being at the helm of the merged entity, according to The Wall Street Journal citing people familiar with the matter.

The all-stock offer is below Viacom’s current market valuation of $12.5 billion, the people said. A special committee of CBS board members tasked with handling negotiations presented the offer to a special committee of Viacom’s board in recent days.

In its offer, CBS proposed that Chief Executive Leslie Moonves and President Joe Ianniello would run the combined company for the foreseeable future, which could make Viacom CEO Bob Bakish an odd man out.

Both CBS and Viacom are controlled by media mogul Sumner Redstone’s holding company National Amusements Inc., which has a nearly 80% voting stake in each firm. Shari Redstone, Mr. Redstone’s daughter and the president of National Amusements, is a vice chair of both both CBS and Viacom and has been pushing for the two companies to recombine.

CBS’s proposal could be the beginning of a negotiation, if Viacom rebuffs the offer and pushes for better terms.

Ms. Redstone will loom large in cementing a deal. She rose to prominence in the business empire in 2016 after a power struggle that led to the ouster of Viacom’s prior management team. She brought in Mr. Bakish as Viacom CEO and is close to him.