) inched closer to its plans of converting its subsidiary
CBS Outdoor Americas Inc.
) into a Real Estate Investment Trust (REIT). The company announced
that it will divest its entire 81% stake in CBS Outdoors through an
exchange offer. Shares of CBS Corp. rose 1.2% whereas shares of the
CBS Outdoors fell 2.2% following the news.
The offer is expected to be tax free for participating shareholders
in the U.S. and is likely to be the final step toward the
separation of CBS Outdoor which began trading as a separate entity
in March earlier this year. As per the offer, CBS Corp shareholders
can exchange all, some or none of their shares for CBS Outdoor
shares at a 7% discount. CBS Corp has 97 million shares of the
Also, CBS Outdoor had concluded an initial public Offering (IPO) of
19% of its stake in April 2014. 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.
Conversion into a REIT is important from the taxation viewpoint as
REITs enjoy tax benefits given the norm of paying 90% of its income
as dividends to shareholders. As per CBS Outdoors., the conversion
will help maximize shareholder wealth.
For CBS Corp. which competes with
Lions Gate Entertainment Corp
The Walt Disney Co.
), the split will allow more focus on its primary operations i.e.
developing, producing and distributing finest quality content
across all platforms on a worldwide level.
CBS Outdoors America is a leading out-of-home media company with
significant presence in the United States, Canada, Mexico and South
CBS Corp carries a Zacks Rank #3 (Hold).
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