CBS and Viacom are in the final stages of a merger that is said to be negotiated in terms of an all-stock deal.
Although the deal still may fall through, as of now, the stock exchange ratio for the deal is in the range of 0.59 to .60 of a CBS share per Viacom share. That would be put Viacom at just below its market value, which stands at nearly $12 billion.
Shares of both companies fell once the Wall Street Journal reported on the terms of the deal. CBS shares fell 1.5% and Viacom shares fell 4.9%.
This is also not the first time that the two companies have entered merger talks. The last time the two companies negotiated a deal the exchange ratio was nearly 0.61. However, the deal fell through because CBS sued National Amusements Inc., a company that owns both CBS and Viacom.
Bob Bakish, the CEO of Viacom, is expected to run the merged entity and Joe Ianniello, the CEO of CBS is set to run CBS-branded assets. The merger will make the new company more competitive with other media giants.
“This comes down, in my view, to what are management’s ambitions for the future. They have enough, together, to maintain CBS’s ambitions of reaching 25 million direct-to-consumer subscribers by 2022,” said Michael Nathanson, co-founder of boutique analysis firm Moffett Nathanson.
The merger will benefit both companies at a time when streaming is taking higher relevance over consumers than cable services.