The soon-to-be-new Viacom has tapped an outside exec to identify potential new purchases.
Wade Davis, managing director and co-head of investment banking and head of mergers & acquisitions (M&A) for investment banker ThinkEquity partners, is joining the new Viacom.
After the company divides into Viacom and CBS--targeted for year's end--he will become senior VP of mergers & aquisitions, reporting to Michael J. Dolan, executive VP and CFO of Viacom.
Viacom in October filed the paperwork with the Securities & Exchange Commission to split itself into two companies, Viacom and CBS Corp.
Davis will have some constraints on potential acquisition targets.
Although separate, the two companies will be commonly controlled, with Sumner Redstone atop both.
As such, they have agreed not to acquire assets that would limit the other in terms of media ownership. For example, Viacom would not buy a newspaper in a market if it would mean CBS would have to divest a station there.
According to an SEC transcript of his presentation to a Credit Suisse First Boston conference Monday, Dolan said that company was happy with the assets it already has, and wasn't looking to add a "fourth or fifth leg to the stool."
But he also said Viacom needed to "exploit growth opportunities" in the international and digital spaces. "You are going to see us doing things that will be very careful, very cautious with shareholder capital and then the phrase we have used is "tuck-in" acquisitions. And you've seen a bunch of them already. NeoPets [an online "virtual pet" playground] is sort of for us the poster child of the kind of acquisition we are looking for in the digital space," he told conference attendees.
But the company is more likely to repurchase shares of its own stock than go on a buying binge.
"I think we're going to be in the enviable position of having excess free cash flow. And then the question becomes what do you do with it.," he said. "And I think our statements have been consistently that we intend to have a very significant and fairly aggressive share repurchase program."
Not that there aren't growth opportunities, not that we don't see growth opportunities. It's not a question that we don't intend to exploit them. But when we look at the horizon, we think that the cash flow potential of these businesses going forward will exceed all of the natural and attractive acquisitions and investment opportunities we're likely to see."