Sumner Redstone and his daughter Shari Redstone have made the surprise move to halt the proposed merger of Viacom and CBS. The two entertainment companies are both controlled by the Redstones’ privately held National Amusements and were once one company, but were separated ten years ago.
Viacom stock dropped on the news. It fell more than 7 percent. CBS stock also dropped, falling by more than 5 percent.
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Shari Redstone, the vice chair of the board for both companies, made the decision herself. This was a shocker since she had been one of the merger plan’s proponents. Reportedly she now backs acting Viacom CEO Bob Bakish’s plans to concentrate on expanding Viacom.
Viacom Shares Sink After Merger Talks are Scrapped, CBS Also Drops https://t.co/oUSefkNuR7
— Variety (@Variety) December 12, 2016
National Amusements released a statement saying, “Over the past few months, after careful assessment and meetings with the leadership of both companies, we have concluded that this is not the right time to merge the companies. Following the management changes that the Viacom Board put in place, we have been very impressed with the forward-looking thinking and strategic plan being pursued under Bob Bakish’s leadership.”
And Sumner and Shari Redstone sent a letter to the boards of CBS and Viacom saying, “We know Viacom has tremendous assets that are currently undervalued, and we are confident that with this new strong management team, the value of these assets can be unleashed. At the same time, CBS continues to perform exceptionally well under Les Moonves, and we have every reason to believe that momentum will continue on a stand-alone basis.”
This comes just three months after the Redstones released a public letter to the boards of Viacom and CBS calling on them to adopt the merger plans. They said then that by once again becoming one entity the two would better be able to help each other grow.
Redstone Firm Pulls Support for Viacom-CBS Merger https://t.co/w6yDjoUiqD
— The Wall Street Journal (@WSJ) December 12, 2016
According to The Wall Street Journal, the heads of CBS and Viacom respectively were not happy with the merger plans. Existing as separate companies, they feel, forces them to work harder to perform better.
Shari Redstone has been in de facto control of National Amusements since her 93 year old father Sumner became unable to continue to operate the company himself. The news comes as the Redstones are suing two of Sumner’s former lovers for more than $150 million. The suit claims that they defrauded him into giving them gifts of that value.