National Instruments Proposes Merger of Viacom and CBS

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Viacom Inc. (NASDAQ: VIAB) and CBS Corp. (NYSE: CBS) saw their shares jump on Thursday after Sumner Redstone’s National Amusements sent a letter to the boards of directors proposing a merger. At the same time, National Amusements said that it is not willing to accept or support any acquisition of Viacom by a third party or any transaction that would result in National Amusements surrendering its controlling position in Viacom.

National Amusements, directly and through subsidiaries, owns approximately 80% of the voting shares of both Viacom and CBS and approximately 10% of Viacom’s total common stock outstanding.

Ultimately, National Amusements believes that a combination of CBS and Viacom might offer substantial synergies to better attack the changing entertainment and media landscape.

The tentative view of this proposed transaction 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.

In the letter, National Instruments noted that none of Sumner 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.

The letter concluded saying:

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.

Shares of Viacom were trading up over 3% at $42.33 on Thursday, with a consensus analyst price target of $50.00 and a 52-week trading range of $38.61 to $47.17.

CBS shares were up 1.4% to $54.92. The consensus price target is $62.67, and the 52-week range is $38.76 to $58.22.