Viacom expressed its dissatisfaction with Wall Street’s downbeat evaluation of outdoor advertising and radio group Infinity (in which it holds a 64% controlling stake) by slapping $15.5 billion on the table in a bid to acquire the residual 36% of the group’s stock.
Other shareholders in Infinity are said to be agog with glee at the Viacom offer which adds a premium of 13.6% to Infinity’s current share price of $35.25.
The media and entertainment giant has made no secret of its irritation with Wall Street’s treatment of Infinity and Viacom president and chief operating officer Mel Karmazin recently told analysts that the company was not only its fastest growing unit but also the chief contributor to its profits.
Infinity posted revenues of $2.8bn last year, earning $1.8bn from its radio operations and the rest from outdoor advertising. The company also recorded a 73% hike in operating cash flow in its most recent quarter – access to which may well have been the motivating factor in Viacom’s move.
News source: Financial Times