Viacom and CBS Boards Hire Advisers for Potential Merger
08 October 2016 - 9:10AM
Dow Jones News
The Viacom Inc. and CBS Corp. deal machines are revving up.
The special committee of the board of Viacom has hired Morgan
Stanley to explore a potential combination with CBS, people
familiar with the matter say.
CBS's special committee, for its part, has retained Lazard as
its financial adviser and Morton Pierce of White & Case as its
legal counsel, the people say.
A spokeswoman for Morgan Stanley declined to comment. A Lazard
spokeswoman had no immediate comment. Mr. Pierce declined to
comment.
Given the struggles of Viacom's cable networks and movie studio,
finding a valuation that both sides can live with will be one of
the big challenges in pulling off a deal, and there will be plenty
of work for the investment banking and law firm crowd.
A decade after splitting apart, Viacom and CBS were asked to
consider merging last week by National Amusements, the Redstone
family's holding company, which owns roughly 80% of the voting
shares of both companies.
A reunion of the companies, which have a combined market
capitalization of around $40 billion, would likely be the year's
biggest media deal and a potential fee bonanza for advisers lucky
enough to land a role.
Bankers who win business on a Viacom-CBS merger could also get
close to the industry's newest mogul, Shari Redstone, who has risen
to power in the media empire built up by her father, the
93-year-old Sumner Redstone. They would also likely be in strong
position if the resulting entity went on the prowl for another big
deal.
Viacom plans to hire a second financial advisor, the people
familiar with the matter said. A number of financial and legal
advisers could also be hired separately by CBS's management, people
close to the situation say.
Morgan Stanley had previously worked for Viacom on a short-term
basis last month, when it did a capital review along with LionTree
Advisors.
Viacom has been trying to deal with a heavy debt load, even as
low cable TV ratings and a lack of hits from its Paramount Pictures
studio put pressure on its financial results.
The hiring of financial advisors comes just a week after CBS and
Viacom set up special committees to review a potential deal.
The Viacom committee consists largely of new independent board
members brought on in the wake of a fierce power struggle between
the management of Viacom and the Redstone family. That struggle led
to the departure of former Viacom Chief Executive Philippe Dauman
and the ascension of Ms. Redstone.
Viacom's special committee includes Chairman Thomas May and
Nicole Seligman, who are co-chairing the committee, as well as
Kenneth Lerer, Judith McHale and Ronald Nelson. Charles Phillips is
the only longtime Viacom director also serving on the committee,
which last week announced it had hired Debevoise & Plimpton as
legal counsel.
In National Amusements' letter to the boards, it said it
believed "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." It also said that
it would not consider an acquisition by a third party or giving up
its controlling position.
Write to Keach Hagey at keach.hagey@wsj.com
(END) Dow Jones Newswires
October 07, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
CBS (NYSE:CBS)
Historical Stock Chart
From Apr 2024 to May 2024
CBS (NYSE:CBS)
Historical Stock Chart
From May 2023 to May 2024