CBS is likely to reject Viacom’s demand for a higher valuation

Viacom Inc. has asked CBS Corp. to raise its bid by about $2.8 billion, which would value the New York media company at $14.7 billion, according to two people familiar with the matter who were not authorized to speak publicly.

CBS is likely to reject the request.

The Viacom offer recommends an exchange ratio of 0.68 CBS shares for each share of Viacom class B stock. CBS had offered 0.55 of its shares for each Viacom class B share, according to the knowledgeable people — an amount lower than Viacom’s current stock price.

“Given a Viacom counteroffer that appears to suggest a 15 percent to 18 percent premium above its recent trading range … the parties seem reasonably at odds on valuation, not unexpectedly,” Tuna N. Amobi, analyst with CFRA Research, wrote in a Monday note to investors.

CBS has argued that Viacom’s stock already has a built-in premium because Viacom shares rose in late January when news of the possible acquisition emerged. In addition, the proposed deal has weighed on CBS stock as investors worry that swallowing Viacom’s assets could become a drag on CBS.

In a letter to CBS board members last week, Viacom asked that Viacom CEO Bob Bakish become the second-in-command at the proposed combined company, behind CBS CEO Leslie Moonves.

Shari Redstone, whose family controls both companies, has led the drive for an acquisition and has made it clear that she wants Bakish in the heir-apparent role.

Viacom and CBS declined to comment.

The combined company would include CBS’ assets, including the broadcast network, television stations and Showtime premium channel. Viacom owns MTV, VH1, Nickelodeon, BET and the Hollywood movie studio Paramount Pictures.