Viacom Corp. (VIAB) - Get Report shares moved lower on Tuesday, April 3, on media reports that CBS Corp. (CBS) - Get Report is prepared to acquire the cable network and movie studio owner for below market value.
Viacom was down 4.4% in afternoon trading to $29.20, while CBS shares were up 2.5% to $51.95.
Previous analyst reports have speculated that a deal would come at a premium to Viacom's share price. Viacom and CBS declined comment to TheStreet.
Sources told Reuters and CNBC that CBS chief executive Leslie Moonves would stay on for at least two years at the combined company.
The companies on Feb. 1 announced the formation of special committees of their boards of directors to evaluate a potential merger. The companies cautioned there was no guarantee they would reach a deal or of the terms of any transaction.
Theater chain National Amusements Inc., which controls both companies, has expressed support for the process and in the past has pushed for CBS and Viacom to consider a merger. In September 2016, National Amusements approached both boards, only to conclude in December that the time for a merger was not right.
CBS and Viacom were housed under the same corporate roof until Dec. 31, 2005, when Viacom was spun out of the television broadcaster.
When Sumner Redstone of National Amusements announced Viacom's $37.3 billion purchase of CBS in 2000, it was the largest media deal ever.
He envisioned a global media powerhouse, but just five years later the amalgamation of cable, broadcast and film production companies had become too complicated. Viacom spun off CBS to make the companies easier for investors to value and invest in and for management to run.
The previous time the companies considered a merger, Goldman, Sachs & Co. and Moelis & Co. LLC reportedly were advising CBS on the merger talks. A special committee of its board previously retained Lazard Ltd. for financial advice and Morton Pierce of White & Case LLP for legal counsel.
CBS declined to identify the firms advising its special committee on the latest review.
A special committee of Viacom's board in 2016 turned to Morgan Stanley, Allen & Co. and LionTree LLC for financial advice and Debevoise & Plimpton LLP for legal counsel.