Viacom’s board of directors can finally end their mailbox vigil after controlling shareholder Sumner Redstone posted a much anticipated missive calling for the creation of a special committee to investigate the possibility of a merger with the other media company he controls, CBS.
News that a letter was coming from Redstone’s National Amusements, the theater chain that holds his 80% voting interests in both Viacom and CBS, broke yesterday. In a statement Thursday Viacom acknowledged receipt of the missive, adding that its board expects to form a special committee of independent directors to “carefully consider the request from National Amusements and any proposed transaction.”
Viacom noted that in the letter, National Amusements “communicated that it is not willing to accept or support any acquisition of Viacom by a third party or any transaction that would result in National Amusements surrendering its controlling position in Viacom.”
In addition to the 80% voting stake in Viacom and CBS, National Amusements, directly and through subsidiaries, owns about 10% of Viacom’s total common stock outstanding.
The full text of the letter follows:
Members of the Boards:
We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape.
As a result, we would like both companies’ boards to consider a potential combination of the companies. Our tentative view is that the optimal structure would be an all-stock transaction in which the stockholders of each company would receive shares in the combined company of the same class as they currently hold.
We therefore request the board of each company take the appropriate steps to consider the proposed transaction. We believe that any transaction should be the result of full and fair deliberation and negotiation, and that any transaction would proceed only if it is approved by each board. None of Sumner M. Redstone, Shari E. Redstone or David R. Andelman will vote as directors on the consideration of this matter by either company’s board, and none will participate in any of the related deliberations.
To avoid any doubt, National Amusements is not willing to accept or support (i) any acquisition by a third party of either company or (ii) any transaction that would result in National Amusements surrendering its controlling position in either company or not controlling the combined company. We believe moving forward expeditiously, but with due care, is important and we are prepared to be of assistance to the two companies as they explore this possibility.
NATIONAL AMUSEMENTS, INC.
By: /s/ Sumner M. Redstone
Chief Executive Officer
By: /s/ Shari Redstone