Viacom Stock Drops, CBS Shares Rise Slightly in Early Trading as Deal Nears

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Shari Redstone

The companies are closing in on a recombination, which could be announced as early as Monday, with one report suggesting the price of the deal could mean a slight premium for CBS shareholders.

With Viacom and CBS Corp. closing in on a recombination, which could be announced as early as Monday, the companies' stocks started the week going in different directions in early Monday trading amid a report on the pricing of the deal.

The Wall Street Journal reported Monday that the exchange ratio was likely to come in at 0.59 to 0.60 CBS shares for every Viacom Class B share. The report said that could end up meaning a slight premium for CBS shareholders. In 2018, CNBC reported that the companies had agreed on a price ratio of 0.6135 CBS shares for every Viacom Class B share before a deal fell apart.

CBS shares as of 10 a.m. ET were up 0.5 percent at $49.15, while Viacom's stock was down 3 percent at $29.12 amid a broader market decline dragging down many stocks.

As reported early in the monthViacom CEO Bob Bakish will lead the combined company as CEO, while CBS Corp. acting CEO Joe Ianniello will also remain in a top executive position. Since then, the companies have also reached agreement on the composition of the board of the merged company, but the stock exchange ratio for the deal has remained the key haggling point.

Privately held National Amusements, owned by the Redstone family and led by the companies' vice chair Shari Redstone, is the controlling shareholder of both. The firms twice before explored a recombination without reaching an agreement. 

The exchange ratio has been much discussed on Wall Street in recent weeks. MoffettNathanson’s Michael Nathanson wrote in mid-July that "we are comfortable using the current ratio of 0.59 times as the base case in our merger model." And Loop Capital analyst Alan Gould more recently wrote: "Viacom’s shares have traded at an average ratio of 0.598 times the CBS price for the past 60 days, which compares with 0.590 over the past six months and 0.577 over the past year."