CBS Corp. To Divest CBS Outdoor Stock

The long-planned spinoff of CBS Outdoor as an independent company is nearing completion. On Wednesday, former parent company CBS Corp. announced plans to fully divest its 81% stake in CBS Outdoor Americas, finally severing the last remaining financial connection between the two companies.
The divestment will take place through a tax-free stock exchange offer from CBS Corp., which will enable CBS Corp. shareholders to trade in their shares in exchange for shares in CBS Outdoor Americas, at a 7% discount off the price of the new company’s stock.

CBS Corp. owns a total of 97 million shares in CBS Outdoor. Once the divestment is complete, CBS Outdoor will convert itself into a real estate investment trust, or REIT.
CBS shouldn’t have too much trouble drumming up demand for the share exchange, considering the relatively strong performance of CBS Outdoor’s stock to date. After going public at $28 a share in late March, the price quickly rose to $30.10 on the first day of trading, and is now selling for $31.22, giving the company a market value of around $3.8 billion.
The IPO sold 20 million shares in CBS Outdoor, raising around $560 million for the new, independent company. Funds raised in the IPO will be used to finance CBS Outdoor’s conversion into a real estate investment trust -- a corporate structure that should allow the company to avoid most federal income tax, as long as it pays out 90% or more of its earnings in the form of dividends to shareholders.

In an earlier filing, CBS Outdoor revealed that it will pay shareholders a dividend of $0.37 per share per quarter after the REIT conversion.
CBS has been preparing for the spinoff of its outdoor division for over a year. In July of 2013, CBS Outdoor sold off its international division, including all its overseas properties except the Americas, to Platinum Equity for $225 million.

CBS Outdoor isn’t the only big out-of-home advertiser moving to convert itself into an REIT. Lamar received clearance from the IRS for the conversion in April and expects to be able to convert in time for the 2014 tax year



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