CBS offered 20 million shares, ~17% of the billboard company (although the bankers have option to increase that to 19%), priced at $28 effectively valuing the company at a little more than $3b. CBS raised about $560m in proceeds from the offering which it expects to use for share buybacks although CEO Les Moonves indicated that he is ‘flexible’.
Many applauded the move feeling that the outdoor ad business no longer fit within the content-focused CBS. In fact, Mr. Moonves himself said that synergies between the companies were non-existent and that ‘most of what Outdoor sells is local, most of what the network sells is national.’ CBS Outdoors generated $1.3b in revenue last year and is profitable, however, revenue growth is basically non-existent. The company has heavy exposure to the New York City & LA markets and it may try to expand via acquisitions. Although it isn’t a REIT yet, the company does plan on paying out a quarterly dividend of $0.37 per share which translates into a ~5% yield. Additional information on the company can be found within its S-11 filing and there are a few other publicly traded peers such as Clear Channel Outdoor Holdings (CCO) and Lamar Advertising (LAMR) which can be used as comps. It’s worth noting that Lamar is also pursuing REIT status, although the process is taking a long time.
Overall, the IPO was nicely received and shares were up over 8% at one point before settling down a bit. Next up on the agenda is the planned spinoff of CBS’ remaining CBSO stake later this year and we will be sure to keep you updated on the company’s progress.
Disclosure: Author holds no stake in any stock mentioned.