Viacom Inc. headquarters in New York. (Photographer: John Taggart/Bloomberg)

CBS Is Said to Consider Below-Market Bid for Viacom in Days

(Bloomberg) -- 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 and CBS shares are both down about 12 percent since the news of a possible merger first came out in early January. Reuters on Monday reported that CBS was preparing a below-market bid.

On Tuesday, Viacom fell as much as 4.7 percent to $29.11 in New York, the biggest intraday drop since Feb. 9. CBS rose 2 percent to $51.74 at 10:09 a.m.

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.

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