The Redstone family's holding company, National Amusements, confirmed that it has asked the boards of CBS and Viacom to consider a potential combination of the media companies.
National Amusements owns 80% of the voting rights for both CBS and Viacom.
In a letter to the boards, National Amusements said "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."
National Amusements, led by Sumner Redstone and his daughter Shari Redstone, pushed Viacom CEO Philippe Dauman out of both Viacom and National Amusement in a long, public battle for control of Redstone's $40 billion media empire this year.
The company said it is looking at an all-stock transaction in which the stock holders in the companied company would receive shares in the combined company of the same class as they currently hold.
If the Redstones maintain the bulk of voting shares, they would continue to control the companies.
A CBS spokesperson said: "CBS is in receipt of the letter, and its management and independent directors will take appropriate action to evaluate what is in the best interest of the Company and its shareholders."
Viacom also confirmed that its board of directors has received the letter from National Amusements.
“The Company expects that the Viacom board of directors will form a special committee of independent directors to carefully consider the request from National Amusements and any proposed transaction,” Viacom said.
Here is the text of the letter:
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.
Sumner Redstone, CEO
Shari Redstone President.