Years of waiting for CBS (NYSE:CBS) and Viacom (NASDAQ:VIA, VIAB) to merge proved lost time for investors. CBS will exchange each Viacom share for 0.59625.
This ratio lower than Viacom investors thought.
When the two companies are merged in the all-stock deal, CBS shareholders will hold 61% of the combination. The deal, which is expected to close at the end of this year, should deliver $500 million in synergies.
The deal is most unimpressive. The share exchange ratio dropped in the last year. And in that time, the CBS CEO was fired, and Viacom reported a better earnings report than CBS.
Unfortunately, nothing fundamentally improves with the deal, other than minor cost reductions and the merged company bigger by market capitalization.
Investors may seek better returns elsewhere. Fox (NASDAQ:FOX) shares fell after its first quarterly report as a standalone company. It reported revenue growing 5%, driven by TV affiliate fees that offset ad declines.
Disney (NYSE:DIS) stock dipped from 52-week highs after reporting a drop in park attendance and Q3 results falling short of consensus.
Takeaway
If investors had to choose between VIA and CBS stock, CBS is a better deal. Viacom’s last quarter improved and CBS is getting the unit at a lower price than last year.
