US: CBS, Viacom reach preliminary merger agreement

The boards of CBS and Viacom have reached what is being described as a preliminary agreement on their long-awaited merger, all but guaranteeing the combination of the two media companies controlled by the Redstone family’s National Amusements will be official imminently, according to people close to the matter.

The exact timing of the merger announcement remains somewhat in flux, these people said. But the boards of both companies and their investment banks are rushing to complete the necessary paperwork to announce the deal sometime today, perhaps after the market close at 4 p.m. ET, these people add.

Both companies had worked over the weekend in an attempt to announce the merger on Monday, August 12, but two outstanding issues delayed any official announcement. First, the companies needed to reach a firm agreement on the price to take into account that CBS, with a market value of US$18 billion, will technically be taking over the smaller Viacom, with a market value of around US$12 billion. Under the terms of the deal, each Viacom share will be worth 0.59625 shares, these people say.