) announced that it has received a favorable tax ruling from the
Internal Revenue Service (IRS) in a private letter regarding the
conversion of its subsidiary
CBS Outdoor Americas Inc.
) into a real estate investment trust (REIT). Shares of CBS Corp.
rose 2% yesterday while that of CBS Outdoor rose nearly 7%.
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Earlier this month, CBS Outdoor had concluded an initial public
Offering (IPO) of 19% of its stake. After eliminating
underwriting discounts and commissions, the net proceeds from the
IPO came in at $615 million. CBS Outdoor will use the net
proceeds to pay CBS Corp. for its contribution, and use the
remaining amount to pay shareholders' in correlation with the
conversion into a REIT.
The remaining 81% stake in CBS Outdoors is held by CBS Corp. The
latter plans to sell it through a tax-free split-off later this
year. CBS Outdoor plans to convert itself into a REIT going
This is important from taxation point of view, as REITs enjoy tax
benefits given the norm of paying 90% of its income as dividends
to shareholders. As per CBS Corp., the conversion will help
maximize the shareholders wealth.
CBS Outdoors America is a leading out-of-home media companies
with significant presence in the United States, Canada, Mexico
and South America. As of Sep 30, 2013, the company had nearly
329,100 displays in the United States and about 26,100 displays
throughout Canada and Latin America. Its clientele includes
The Gap, Inc.
Currently, CBS Corp. carries a Zacks Rank #3 (Hold).