CBS shares surged 7.9 percent to $40.95 yesterday after the owner of the most-watched US television network said it will convert its outdoor ad division into a real estate investment trust and seek a buyer for the European and Asian parts of that business.
It was the stock’s biggest jump since August 2011. If completed, the actions may be worth $3 a share to CBS investors, said Michael Morris, an analyst at Davenport & Co.
Real estate investment trusts, or REITs, have become a popular tool for companies to lower taxes and improve returns for investors. REITs don’t pay federal income taxes, with the understanding they distribute at least 90 percent of taxable earnings to shareholders as dividends. CBS could split off the REIT as a separate stock to shareholders.
The broadcaster has been trying to find a buyer for the business, which sells ad space on billboards, bus panels and transit shelters, since at least last June. But Chief Executive Leslie Moonves was reportedly seeking at least $6 billion, a price that may have dissuaded interested buyers.