S-4 1 d804971ds4.htm S-4 S-4
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As filed with the Securities and Exchange Commission on October 16, 2019

Registration No. 333-          

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

CBS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-09553   04-2949533

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

51 West 52nd Street

New York, New York 10019

(212) 975-4321

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Laura Franco

Executive Vice President, General Counsel

CBS Corporation

51 West 52nd Street

New York, New York 10019

(212) 975-4321

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

 

Kenneth A. Lefkowitz

Charles A. Samuelson

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, New York 10004-1482

(212) 837-6000

 

Christa A. D’Alimonte

Executive Vice President, General Counsel and Secretary

Viacom Inc.

1515 Broadway

New York, New York 10036

(212) 258-6000

 

Creighton O’M. Condon

Daniel Litowitz

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022-6069

(212) 848-4000

 

Robert B. Schumer

Ariel J. Deckelbaum

Michael Vogel

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019-6064

(212) 373-3000

   

Faiza J. Saeed

Damien R. Zoubek

O. Keith Hallam

Cravath, Swaine & Moore LLP

Worldwide Plaza, 825 Eighth Avenue

New York, New York 10019-7475

(212) 474-1000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the proposed merger described in the enclosed joint consent solicitation statement/prospectus have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐


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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

per Share

 

Proposed

Maximum
Aggregate

Offering Price(3)

 

Amount of

Registration Fee(6)

Class A common stock, par value $0.001 per share

  29,472,927 shares(1)   N/A   $1,251,579,880.20(4)   $162,455.07

Class B common stock, par value $0.001 per share

  221,435,633 shares(2)   N/A   $8,564,034,698.96(5)   $1,111,611.70

 

 

(1)

Represents the maximum number of shares of Class A common stock, par value $0.001 per share (“CBS Class A common stock”), of CBS Corporation (“CBS”) estimated to be issuable by CBS upon the consummation of the merger described herein, calculated as the product of (i) 49,430,485 shares of Class A common stock, par value $0.001 per share (“Viacom Class A common stock”), of Viacom Inc. (“Viacom”) outstanding as of October 11, 2019, multiplied by (ii) 0.59625, the exchange ratio for the merger (the number of shares of CBS Class A common stock issuable for each share of Viacom Class A common stock).

(2)

Represents the maximum number of shares of Class B common stock, par value $0.001 per share (“CBS Class B common stock”), of CBS estimated to be issuable, or subject to options or other equity-based awards that are to be assumed, by CBS upon the consummation of the merger described herein, calculated as the product of (i) 371,380,516 shares of Class B common stock, par value $0.001 per share (“Viacom Class B common stock”), of Viacom outstanding or subject to options or other equity-based awards of Viacom as of October 11, 2019, multiplied by (ii) 0.59625, the exchange ratio for the merger (the number of shares of CBS Class B common stock issuable for each share of Viacom Class B common stock).

(3)

Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the “Securities Act”) and calculated in accordance with Rule 457(c) and 457(f)(1) of the Securities Act.

(4)

The proposed maximum aggregate offering price of CBS Class A common stock to be registered is based on the product of (i) the average of the high and low sale prices of Viacom Class A common stock as reported on NASDAQ Global Select Market (“NASDAQ”) on October 11, 2019, ($25.32) multiplied by (ii) the maximum number of shares of Viacom Class A common stock expected to be exchanged in connection with the merger described herein (49,430,485).

(5)

The proposed maximum aggregate offering price of CBS Class B common stock to be registered is based on the product of (i) the average of the high and low sale prices of Viacom Class B common stock as reported on NASDAQ on October 11, 2019, ($23.06) multiplied by (ii) the maximum number of shares of Viacom Class B common stock expected to be exchanged in connection with the merger described herein (371,380,516).

(6)

Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $129.80 per $1,000,000 of the proposed maximum aggregate offering price.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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Information contained herein is subject to completion or amendment. A registration statement relating to the securities to be issued in connection with the merger has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint consent solicitation statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

DATED OCTOBER 16, 2019, SUBJECT TO COMPLETION

To Our Stockholders:

On behalf of the boards of directors of CBS Corporation (“CBS”) and Viacom Inc. (“Viacom”), we are pleased to enclose the joint consent solicitation statement/prospectus relating to the proposed combination of CBS and Viacom.

ViacomCBS Inc. (“ViacomCBS”), as the combined company will be named, will be a leading global, multiplatform, premium content powerhouse, with the assets, capabilities and scale to be one of the most important content producers and providers in the world and an indispensable player in the global media ecosystem. Through our premium content scale, broadcast and cable leadership positions in markets across the U.S., Europe, Latin America and Asia, global production capabilities, major Hollywood film studio, portfolio of streaming products, and industry-leading advertising and marketing solutions, ViacomCBS will be positioned to serve consumers, the creative community, commercial partners and employees, while creating long-term value for shareholders.

The strength and scale of ViacomCBS’ assets will enable us to pursue a growth strategy driven by one agenda—to maximize the value of the content we create, whether for our own platforms or for others:

 

  1.

Global producer and provider of content: ViacomCBS will be home to more than 140,000 premium TV episodes and 3,600 film titles, with global production capabilities and approximately $13 billion in annual content investment. This means we can both support our own platforms, as well as feed escalating demand for third-party premium content;

 

  2.

Enhanced affiliate/advertising partnerships: ViacomCBS’ broad reach and intellectual property portfolio will put us in a strong position to partner with distributors and advertisers, and utilize our expertise in advanced advertising and marketing solutions; and

 

  3.

Portfolio of streaming products: Our content scale will support our streaming strategy, where we have compelling advertising and subscription-based offerings, including CBS All Access®, Showtime®OTT, Pluto TVTM, and other more targeted offerings, including Noggin® and BET+.

We believe that these distinct strengths—supported by our culture built around content—will make ViacomCBS one of just a handful of companies positioned to shape the future of the media industry.

ViacomCBS will also be positioned to deliver significant value for shareholders. ViacomCBS will have an attractive growth outlook and increased financial scale with substantial free cash flow, which will enable significant and sustained investment in programming and innovation, as well as support ViacomCBS’ commitment to maintaining a modest dividend payment. The transaction is expected to be earnings-per-share accretive and to deliver beneficial cost and revenue synergies within 12-24 months following closing. ViacomCBS will benefit from a strong balance sheet, an attractive debt profile and a management team focused on shareholder return.

Upon successful completion of the merger, holders of Viacom Class A common stock will receive 0.59625 shares of ViacomCBS Class A common stock, and holders of Viacom Class B common stock will receive 0.59625 shares of ViacomCBS Class B common stock, for each share of Viacom Class A common stock or Viacom Class B common stock they own, respectively. Holders of CBS Class A common stock and CBS Class B common stock will continue to own their existing shares.

CBS Class A common stock and CBS Class B common stock are traded on the NYSE under the ticker symbols “CBS.A” and “CBS,” respectively. Viacom Class A common stock and Viacom Class B common stock are traded on NASDAQ under the symbols “VIA” and “VIAB,” respectively. As a result of the merger, CBS common stock will be delisted from the NYSE and Viacom common stock will be delisted from NASDAQ. Following the completion of the merger, ViacomCBS Class A common stock and ViacomCBS Class B common stock will be listed on NASDAQ under ticker symbols “VIACA” and “VIAC,” respectively.


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The adoption of the merger agreement and the consummation of the transactions contemplated thereby require approval by holders of a majority of the outstanding shares of each of CBS Class A common stock and Viacom Class A common stock. We are therefore sending the accompanying joint consent solicitation statement/prospectus to the holders of CBS Class A common stock and Viacom Class A common stock to request that they consider and approve proposals for (i) the adoption of the merger agreement and the approval of the merger and (ii) on a non-binding, advisory basis, certain compensation that will or may be payable to certain of CBS’ and Viacom’s respective named executive officers in connection with the merger. We also request that holders of CBS Class A common stock consider and approve proposals for (i) the stock issuance to holders of Viacom common stock pursuant to the merger agreement, (ii) the adoption of the amended and restated certificate of incorporation of ViacomCBS, and (iii) the adoption of the amended and restated bylaws of ViacomCBS.

Following the unanimous determination by a special committee of each of our boards of directors that its company’s entry into the merger agreement and consummation of the transactions contemplated thereby are advisable and in the best interests of such company and its stockholders, each of our boards has recommended that the respective holders of our Class A common stock vote “FOR” the adoption of the merger agreement and each of the other proposals to be considered by holders of CBS Class A common stock and Viacom Class A common stock, as applicable, by executing and returning the written consent furnished with the joint consent solicitation statement/prospectus. National Amusements, Inc., which, as of the date of the accompanying joint consent solicitation statement/prospectus, holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively, has agreed to deliver consents sufficient to assure approval of the transaction.

Neither CBS nor Viacom will be holding a stockholders’ meeting to consider the CBS proposals or the Viacom proposals, as applicable.

The obligations of CBS and Viacom to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the agreement and plan of merger and merger agreement amendment, which are included as Annex B and Annex C, respectively, to the accompanying joint consent solicitation statement/prospectus. We encourage you to read the entire joint consent solicitation statement/prospectus carefully, in particular the Risk Factors section beginning on page 49 for a discussion of the risks relevant to the merger.

This combination of CBS and Viacom will create a company well-positioned for both today and tomorrow, and we are incredibly excited at the opportunities ahead for ViacomCBS.

 

[                ]

Joseph R. Ianniello

President and Acting Chief Executive Officer

 

CBS Corporation

  

[                ]

Robert M. Bakish

President and Chief Executive Officer

 

Viacom Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the securities to be issued in connection with the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying joint consent solicitation statement/prospectus is dated [], 2019, and is first being mailed to the stockholders of CBS and Viacom on or about [], 2019.


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LOGO

 

CBS CORPORATION

51 West 52nd Street

New York, NY 10019

NOTICE OF SOLICITATION OF WRITTEN CONSENT OF CBS STOCKHOLDERS

Dear CBS Stockholders:

Pursuant to an Agreement and Plan of Merger, dated as of August 13, 2019, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of October 16, 2019 (as it may be further amended or supplemented from time to time, the “merger agreement”), by and between CBS Corporation (“CBS”) and Viacom Inc. (“Viacom”), Viacom will merge with and into CBS (the “merger”), with CBS continuing as the surviving company, on the terms and subject to the satisfaction or waiver of the conditions described in the merger agreement.

The accompanying joint consent solicitation statement/prospectus is being delivered to you on behalf of the CBS board of directors to request that holders of CBS Class A common stock as of the close of business on the record date of [●], 2019 (the “CBS record date”) execute and return written consents to approve proposals for (1) the adoption of the merger agreement and the approval of the merger (the “CBS merger agreement proposal”), (2) the issuance of CBS common stock to holders of Viacom common stock pursuant to the merger agreement (the “CBS stock issuance proposal”), (3) the adoption of the amended and restated certificate of incorporation of the combined company (the “A&R Charter” and the “CBS A&R Charter proposal,” respectively), (4) the adoption of the amended and restated bylaws of the combined company (the “A&R Bylaws” and the “CBS A&R Bylaws proposal,” respectively), and (5) on a non-binding, advisory basis, certain compensation that will or may be payable to certain of CBS’ named executive officers in connection with the merger (the “CBS advisory compensation proposal” and, collectively with the CBS merger agreement proposal, the CBS stock issuance proposal, the CBS A&R Charter proposal and the CBS A&R Bylaws proposal, the “CBS proposals”). The closing of the merger is conditioned on, among other things, approval of the CBS merger agreement proposal and the CBS stock issuance proposal, in each case, by holders of a majority of the issued and outstanding shares of CBS Class A common stock. Approval of each of the CBS proposals requires the consent of the holders of a majority of the issued and outstanding shares of CBS Class A common stock. Holders of CBS Class B common stock are not entitled to vote and are receiving the accompanying joint consent solicitation statement/prospectus for informational purposes only.

The accompanying joint consent solicitation statement/prospectus describes the merger, the CBS proposals and the actions to be taken in connection with the merger and the CBS proposals and provides additional information about the parties involved, the merger agreement and the agreements entered into in connection with the merger. Please give this information your careful attention. In particular, see the section entitled “Risk Factors” beginning on page 49 of the accompanying joint consent solicitation statement/prospectus. The agreement and plan of merger and the merger agreement amendment are included as Annex B and Annex C, respectively, to the accompanying joint consent solicitation statement/prospectus.

A special committee of the CBS board of directors and the CBS board of directors considered the terms of the merger agreement. Following the unanimous approval by a special committee of independent members of the CBS board of directors of the merger agreement and the transactions contemplated thereby, and such special committee’s determination that the merger is advisable and in the best interests of CBS and its stockholders and its recommendation to the CBS board of directors with respect thereto, the members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee) unanimously determined that the entry into the merger agreement and the transactions contemplated thereby are


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advisable and in the best interests of CBS and its stockholders, adopted, approved and declared advisable the merger agreement and the transactions contemplated thereby, and recommended that CBS stockholders entitled to vote adopt the CBS merger agreement proposal and the CBS stock issuance proposal.

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” each of the CBS proposals.

Please complete, date and sign the written consent furnished with the accompanying joint consent solicitation statement/prospectus and return it promptly to CBS by one of the means described in the section entitled “CBS Solicitation of Written Consents.”

If you have any questions concerning the merger, the merger agreement or the other transactions contemplated thereby, the CBS proposals, the CBS consent solicitation or the accompanying joint consent solicitation statement/prospectus, or if you have any questions about how to deliver your written consent, please contact MacKenzie Partners, Inc., our information agent, at Viacom-CBS@mackenziepartners.com or toll-free at (888) 410-7851.

By order of the CBS board of directors,

JONATHAN H. ANSCHELL

Executive Vice President, Deputy General Counsel and Secretary

New York, New York

[●], 2019


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LOGO

 

VIACOM INC.

1515 Broadway

New York, NY 10036

NOTICE OF SOLICITATION OF WRITTEN CONSENT OF VIACOM STOCKHOLDERS

Dear Viacom Stockholders:

Pursuant to an Agreement and Plan of Merger, dated as of August 13, 2019, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of October 16, 2019 (as it may be further amended or supplemented from time to time, the “merger agreement”), by and between CBS Corporation (“CBS”) and Viacom Inc. (“Viacom”), Viacom will merge with and into CBS (the “merger”), with CBS continuing as the surviving company, on the terms and subject to the satisfaction or waiver of the conditions described in the merger agreement.

The accompanying joint consent solicitation statement/prospectus is being delivered to you on behalf of the Viacom board of directors to request that holders of Viacom Class A common stock as of the close of business on the record date of [●], 2019 (the “Viacom record date”) execute and return written consents to approve proposals for (1) the adoption of the merger agreement and the approval of the merger (the “Viacom merger agreement proposal”) and (2) on a non-binding, advisory basis, certain compensation that will or may be payable to certain of Viacom’s named executive officers in connection with the merger (the “Viacom advisory compensation proposal” and, together with the Viacom merger agreement proposal, the “Viacom proposals”). The closing of the merger is conditioned on, among other things, approval of the Viacom merger agreement proposal by holders of a majority of the issued and outstanding shares of Viacom Class A common stock. Approval of each of the Viacom proposals requires the consent of the holders of a majority of the issued and outstanding shares of Viacom Class A common stock. Holders of Viacom Class B common stock are not entitled to vote and are receiving the accompanying joint consent solicitation statement/prospectus for informational purposes only.

The accompanying joint consent solicitation statement/prospectus describes the merger, the Viacom proposals and the actions to be taken in connection with the merger and the Viacom proposals and provides additional information about the parties involved, the merger agreement and the agreements entered into in connection with the merger. Please give this information your careful attention. In particular, see the section entitled “Risk Factors” beginning on page 49 of the accompanying joint consent solicitation statement/prospectus. The agreement and plan of merger and the merger agreement amendment are included as Annex B and Annex C, respectively, to the accompanying joint consent solicitation statement/prospectus.

A special committee of the Viacom board of directors and the Viacom board of directors considered the terms of the merger agreement. Following the unanimous determination by a special committee of independent members of the Viacom board of directors that the entry into the merger agreement and the consummation of the transactions contemplated thereby are advisable and in the best interests of Viacom and its stockholders and the unanimous recommendation by such special committee that the Viacom board of directors approve and declare advisable the merger agreement and the consummation of the transactions contemplated thereby, the members of the Viacom board of directors who were present (each of whom is unaffiliated with NAI) unanimously determined that entering into the merger agreement and consummating the transactions contemplated thereby are in the best interests of Viacom and its stockholders, approved and declared advisable the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and recommended that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger.

The Viacom board of directors recommends that Viacom stockholders entitled to vote deliver a written consent “FOR” each of the Viacom proposals.


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Please complete, date and sign the written consent furnished with the accompanying joint consent solicitation statement/prospectus and return it promptly to Viacom by one of the means described in the section entitled “Viacom Solicitation of Written Consents.”

If you have any questions concerning the merger, the merger agreement or the other transactions contemplated thereby, the Viacom merger agreement proposal, the Viacom consent solicitation or the accompanying joint consent solicitation statement/prospectus, or if you have any questions about how to deliver your written consent, please contact MacKenzie Partners, Inc., our information agent, at Viacom-CBS@mackenziepartners.com or toll-free at (888) 410-7851.

By order of the Viacom board of directors,

CHRISTA A. D’ALIMONTE

Executive Vice President, General Counsel and Secretary

New York, New York

[●], 2019


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TABLE OF CONTENTS

 

ADDITIONAL INFORMATION

     1  

ABOUT THIS JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

     2  

QUESTIONS AND ANSWERS

     3  

SUMMARY

     16  

Information About the Companies

     16  

CBS

     16  

Viacom

     16  

NAI

     17  

The Merger and the Merger Agreement

     17  

Merger Consideration

     18  

NAI Support Agreement

     18  

CBS Solicitation of Written Consents

     18  

Viacom Solicitation of Written Consents

     20  

Governance Agreement

     21  

Amendment to Settlement Agreement

     21  

Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement

     22  

Recommendations of the Viacom Special Committee and the Viacom Board of Directors; Reasons for Viacom to Enter into the Merger Agreement

     22  

Accounting Treatment

     23  

Opinions of the CBS Special Committee’s Financial Advisors

     24  

Opinions of the Viacom Special Committee’s Financial Advisors

     24  

Opinion of LionTree

     24  

Opinion of Morgan Stanley

     25  

Interests of Executive Officers and Directors in the Merger

     25  

Interests of CBS’ Executive Officers and Directors in the Merger

     25  

Interests of Viacom’s Executive Officers and Directors in the Merger

     26  

Governance Following Completion of the Merger

     27  

Combined Company Name and Ticker Symbols

     27  

ViacomCBS Board of Directors

     27  

Committees

     28  

Management of ViacomCBS

     28  

Constituent Documents

     29  

Regulatory Approvals

     30  

No Solicitation

     30  

Restrictions on Recommendation Withdrawal

     31  

Conditions to Completion of the Merger

     32  

Closing

     33  

Termination of the Merger Agreement

     33  

Termination Fees; Expenses

     35  

Material U.S. Federal Income Tax Consequences of the Merger

     36  

No Appraisal or Dissenters’ Rights

     37  

Comparison of Stockholder Rights and Corporate Governance Matters

     37  

Litigation Relating to the Merger

     37  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CBS

     38  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF VIACOM

     40  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     42  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL DATA

     44  

COMPARATIVE PER SHARE MARKET PRICE INFORMATION

     46  

 

i


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     48  

RISK FACTORS

     49  

Risk Factors Relating to the Merger

     49  

Risks Relating to ViacomCBS After the Closing

     53  

Other Risk Factors

     59  

INFORMATION ABOUT THE COMPANIES

     60  

CBS

     60  

Viacom

     60  

NAI

     61  

CBS SOLICITATION OF WRITTEN CONSENTS

     62  

Executing Consents

     62  

CBS Record Date; Stockholders Entitled to Consent

     62  

Consent Required

     62  

NAI Consent; Support Agreement

     62  

Share Ownership of and Voting by CBS Executive Officers and Directors

     62  

Solicitation of Consents; Expenses

     62  

Submission of Consents

     63  

Revocation of Consents

     63  

Recommendations of the CBS Special Committee and the CBS Board of Directors

     63  

Other Information

     64  

Assistance

     64  

CBS PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

     65  

CBS PROPOSAL 2—APPROVAL OF THE STOCK ISSUANCE

     66  

CBS PROPOSAL 3—APPROVAL TO ADOPT AMENDMENTS TO THE CERTIFICATE OF INCORPORATION

     67  

CBS PROPOSAL 4—APPROVAL TO ADOPT AMENDMENTS TO THE BYLAWS

     68  

CBS PROPOSAL 5—ADVISORY (NON-BINDING) VOTE ON COMPENSATION

     70  

VIACOM SOLICITATION OF WRITTEN CONSENTS

     71  

Executing Consents

     71  

Viacom Record Date; Stockholders Entitled to Consent

     71  

Consent Required

     71  

NAI Consent; Support Agreement

     71  

Share Ownership of and Voting by Viacom Executive Officers and Directors

     71  

Solicitation of Consents; Expenses

     71  

Submission of Consents

     72  

Revocation of Consents

     72  

Recommendations of the Viacom Special Committee and the Viacom Board of Directors

     72  

Other Information

     73  

Assistance

     73  

VIACOM PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

     74  

VIACOM PROPOSAL 2—ADVISORY (NON-BINDING) VOTE ON COMPENSATION

     75  

THE MERGER

     76  

General

     76  

Exchange Ratio; Consideration to Viacom Stockholders

     76  

Treatment of Equity Awards

     77  

Background of the Merger

     78  

Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement

     110  

Certain CBS Unaudited Prospective Financial Information

     117  

Opinions of the CBS Special Committee’s Financial Advisors

     120  

Opinion of Centerview Partners LLC

     120  

Opinion of Lazard Frères & Co. LLC

     124  

 

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Summary of Joint Financial Analyses

     127  

Other Factors

     132  

Recommendations of the Viacom Special Committee and the Viacom Board of Directors; Reasons for Viacom to Enter into the Merger Agreement

     133  

Certain Viacom Unaudited Prospective Financial Information

     138  

Opinions of the Viacom Special Committee’s Financial Advisors

     143  

Opinion of LionTree

     143  

Opinion of Morgan Stanley

     147  

Interests of CBS’ Executive Officers and Directors in the Merger

     158  

Treatment of CBS Equity Awards

     158  

CBS Senior Executive Retention Plan

     158  

Ianniello Amendment

     159  

The New Ianniello Agreement

     160  

The New Spade Agreement

     161  

The New Franco Agreement

     162  

Benefit Arrangements with ViacomCBS

     162  

Membership of the ViacomCBS Board of Directors

     163  

Indemnification and Insurance

     163  

Shari E. Redstone

     163  

Robert N. Klieger

     163  

Candace K. Beinecke

     164  

Quantification of Potential Payments and Benefits to CBS’ Named Executive Officers in Connection with the Merger

     164  

Interests of Viacom’s Executive Officers and Directors in the Merger

     166  

Treatment of Viacom Equity Awards

     167  

Viacom Executive Retention Plan

     168  

The New Bakish Agreement

     169  

The New D’Alimonte Agreement

     170  

The New Lea Agreement

     171  

The New Phelps Agreement

     171  

Transaction Bonus and  Non-Competition Agreement

     172  

Benefit Arrangements with ViacomCBS

     173  

Membership of the ViacomCBS Board of Directors

     173  

Indemnification and Insurance

     173  

Shari E. Redstone

     173  

Quantification of Potential Payments and Benefits to Viacom’s Named Executive Officers in Connection with the Merger

     174  

Closing and Effective Time of the Merger

     175  

Ownership of ViacomCBS After the Merger

     176  

Governance Following Completion of the Merger

     176  

Combined Company Name and Ticker Symbols

     176  

ViacomCBS Board of Directors

     176  

Committees

     177  

Management of ViacomCBS

     177  

Constituent Documents

     177  

Governance Agreement

     178  

Regulatory Approvals

     179  

Competition Matters

     179  

FCC Consent

     180  

Other Regulatory Matters

     180  

Exchange of Viacom Common Stock; No Fractional Shares

     180  

Indebtedness Following the Merger

     181  

Accounting Treatment

     181  

 

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No Appraisal or Dissenters’ Rights

     181  

Stock Exchange Listing

     181  

Delisting and Deregistration of Viacom Class A and Class  B Common Stock

     182  

Litigation Relating to the Merger

     182  

Certain Relationships between CBS and Viacom

     182  

THE MERGER AGREEMENT

     183  

Explanatory Note Regarding the Merger Agreement

     183  

Structure of the Merger

     183  

Closing

     183  

Effective Time

     184  

Merger Consideration

     184  

Treatment of Equity Awards

     184  

Governance Following Completion of the Merger

     184  

Exchange of Viacom Common Stock; No Fractional Shares

     184  

Representations and Warranties

     185  

Covenants of the Parties

     187  

Conduct of Business Pending the Closing Date

     187  

No Solicitation

     190  

Adverse Recommendation Change; Superior Proposal Termination

     191  

No Stockholder Meetings

     192  

Efforts

     193  

Employee Benefits

     193  

Indemnification and Insurance

     194  

Other Covenants and Agreements

     194  

Conditions to Completion of the Merger

     195  

Termination

     197  

Effect of Termination

     199  

Termination Fees; Expenses

     199  

Amendment and Waiver

     200  

Amendment

     200  

Waiver

     200  

Specific Performance and Third-Party Beneficiaries

     201  

Specific Performance

     201  

Third-Party Beneficiaries

     201  

Governing Law

     201  

SUPPORT AGREEMENT

     202  

GOVERNANCE AGREEMENT

     204  

Provisions in Effect until the Second Anniversary of the Closing

     204  

Other Provisions

     204  

AMENDMENT TO SETTLEMENT AGREEMENT

     205  

CERTAIN BENEFICIAL OWNERS OF CBS COMMON STOCK

     206  

CERTAIN BENEFICIAL OWNERS OF VIACOM COMMON STOCK

     209  

VIACOMCBS INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     211  

DESCRIPTION OF THE CAPITAL STOCK OF VIACOMCBS

     222  

Authorized Share Capital

     222  

Class A Common Stock and Class B Common Stock

     222  

Voting Rights

     222  

Dividends

     222  

Conversion

     223  

Liquidation Rights

     223  

 

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Split, Subdivision or Combination

     223  

Restrictions on Stock Ownership and Transfer; Redemption by ViacomCBS

     223  

Preemptive Rights

     223  

Preferred Stock

     223  

Anti-Takeover Provisions of the A&R Charter and A&R Bylaws

     224  

Exclusive Forum Provision of the A&R Bylaws

     225  

Listing of Common Stock

     225  

Transfer Agent and Registrar

     225  

COMPARISON OF STOCKHOLDER RIGHTS

     226  

Material Differences in Stockholder Rights

     226  

NO APPRAISAL OR DISSENTERS’ RIGHTS

     251  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     252  

Reorganization Treatment

     253  

HOUSEHOLDING INFORMATION

     255  

EXPERTS

     256  

LEGAL MATTERS

     257  

FUTURE STOCKHOLDER PROPOSALS

     258  

CBS

     258  

Viacom

     258  

WHERE YOU CAN FIND MORE INFORMATION

     259  

Annex A—Defined Terms

     A-1  

Annex B—Agreement and Plan of Merger

     B-1  

Annex C—Amendment No. 1 to Agreement and Plan of Merger

     C-1  

Annex D—Support Agreement

     D-1  

Annex E—Governance Agreement

     E-1  

Annex F—Amendment to Settlement Agreement

     F-1  

Annex G—Form of Amended and Restated Certificate of Incorporation of ViacomCBS

     G-1  

Annex H—Form of Amended and Restated Bylaws of ViacomCBS

     H-1  

Annex I—Opinion of Centerview

     I-1  

Annex J—Opinion of Lazard

     J-1  

Annex K—Opinion of LionTree

     K-1  

Annex L—Opinion of Morgan Stanley

     L-1  

 

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ADDITIONAL INFORMATION

This joint consent solicitation statement/prospectus incorporates by reference important business and financial information about CBS and Viacom from documents that are not included in or delivered with this joint consent solicitation statement/prospectus. This information is available without charge to you upon written or oral request. You can obtain the documents incorporated by reference into this joint consent solicitation statement/prospectus by requesting them in writing, by email or by telephone from CBS or Viacom at their respective addresses and telephone numbers listed below or by accessing such documents on the websites listed below. Any other information provided on the websites listed below is not a part of this joint consent solicitation statement/prospectus and therefore is not incorporated by reference into this joint consent solicitation statement/prospectus.

 

For CBS stockholders:

 

Investor Relations

CBS Corporation

51 West 52nd Street

New York, NY 10019

Toll-Free: (877) 227-0787

investorrelations@cbs.com

www.cbscorporation.com

  

For Viacom stockholders:

 

Investor Relations

Viacom Inc.

1515 Broadway

New York, NY 10036

Toll-Free: (800) 516-4399

investor.relations@viacom.com

www.viacom.com

In addition, if you have questions about the merger, the solicitation of CBS written consents or the solicitation of Viacom written consents, or if you need to obtain copies of this joint consent solicitation statement/prospectus or other documents incorporated by reference into this joint consent solicitation statement/prospectus, you may contact the information agent of CBS and Viacom, whose contact information is as follows:

MacKenzie Partners, Inc.

1407 Broadway

New York, NY 10018

Toll-Free: (888) 410-7851

Viacom-CBS@mackenziepartners.com

You will not be charged for any of the documents you request.

To ensure timely delivery, any request should be made no later than [], 2019.

For a more detailed description of the information incorporated by reference into this joint consent solicitation statement/prospectus and how you may obtain it, see the section entitled “Where You Can Find More Information.”

 

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ABOUT THIS JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

This joint consent solicitation statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”) by CBS (File No. 333-[●]), constitutes a prospectus of CBS under Section 5 of the U.S. Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to the ViacomCBS common stock to be issued to Viacom stockholders pursuant to the merger agreement. This joint consent solicitation statement/prospectus also constitutes a consent solicitation statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), of CBS with respect to the CBS proposals, and a consent solicitation statement under Section 14(a) of the Exchange Act of Viacom with respect to the Viacom proposals.

Neither CBS nor Viacom has authorized anyone to give any information or make any representation about the merger or any of the other contemplated transactions, CBS or Viacom that is different from, or in addition to, that contained in this joint consent solicitation statement/prospectus or in any of the materials that have been incorporated by reference. Therefore, neither CBS nor Viacom takes any responsibility for, or can provide any assurance as to the reliability of, any information other than the information contained in or incorporated by reference into this joint consent solicitation statement/prospectus. This joint consent solicitation statement/prospectus is dated [●], 2019. The information contained in this joint consent solicitation statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this joint consent solicitation statement/prospectus to CBS or Viacom stockholders nor the issuance by CBS of common stock pursuant to the merger agreement will create any implication to the contrary.

This joint consent solicitation statement/prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, or the solicitation of a consent, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation.

The information concerning CBS contained in or incorporated by reference into this joint consent solicitation statement/prospectus has been provided by CBS, and the information concerning Viacom contained in this joint consent solicitation statement/prospectus has been provided by Viacom.

Unless otherwise indicated or as the context otherwise requires, all defined terms used but not defined herein shall have the respective meanings set forth in Annex A to this joint consent solicitation statement/prospectus.

 

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QUESTIONS AND ANSWERS

The following are answers to certain questions you may have regarding the merger, the other contemplated transactions, the solicitation of CBS written consents and the solicitation of Viacom written consents. You are urged to read this joint consent solicitation statement/prospectus carefully and in its entirety, because the information in this section may not provide all of the information that might be important to you. Additional important information is also contained in the Annexes to, and the documents incorporated by reference into, this joint consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information.”

 

Q:

WHAT IS THE PROPOSED TRANSACTION?

 

A:

On August 13, 2019, CBS and Viacom entered into an agreement and plan of merger pursuant to which CBS and Viacom agreed to combine their respective businesses.

The agreement and plan of merger and the merger agreement amendment entered into on October 16, 2019 are included as Annex B and Annex C, respectively, to this joint consent solicitation statement/prospectus. The merger agreement contains the terms and conditions of the proposed merger between CBS and Viacom. The merger agreement provides that, upon the terms and subject to the conditions set forth therein, Viacom will merge with and into CBS, with CBS continuing as the surviving company. At the effective time of the merger, the name of the combined company will be changed to “ViacomCBS Inc.”

 

Q:

WHO IS SOLICITING MY WRITTEN CONSENT?

 

A:

The CBS board of directors is soliciting written consents from holders of CBS Class A common stock as of the close of business on [●], 2019 (which we refer to as the “CBS record date”).

The Viacom board of directors is soliciting written consents from holders of Viacom Class A common stock as of the close of business on [●], 2019 (which we refer to as the “Viacom record date”).

If you hold shares of CBS Class B common stock as of the CBS record date or Viacom Class B common stock as of the Viacom record date, you are receiving these consent solicitation materials for informational purposes only.

 

Q:

WHAT ARE HOLDERS OF CBS CLASS A COMMON STOCK BEING ASKED TO APPROVE?

 

A:

Holders of CBS Class A common stock are being asked to (1) adopt the merger agreement and approve the merger, (2) approve the stock issuance, (3) adopt the A&R Charter, (4) adopt the A&R Bylaws, and (5) approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the CBS named executive officers set forth in the CBS 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to CBS’ Named Executive Officers in Connection with the Merger.”

 

Q:

WHAT ARE HOLDERS OF VIACOM CLASS A COMMON STOCK BEING ASKED TO APPROVE?

 

A:

Holders of Viacom Class A common stock are being asked to (1) adopt the merger agreement and approve the merger and (2) approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the Viacom named executive officers set forth in the Viacom 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to Viacom’s Named Executive Officers in Connection with the Merger.”

 

Q:

WHO IS ENTITLED TO GIVE A WRITTEN CONSENT?

 

A:

The CBS board of directors has set [●], 2019 as the record date for determining the holders of CBS Class A common stock entitled to execute and deliver written consents with respect to the CBS proposals. Holders

 

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  of CBS Class A common stock at the close of business on the CBS record date will be entitled to give or withhold consent with respect to the CBS proposals using the written consent furnished with this joint consent solicitation statement/prospectus.

The Viacom board of directors has set [●], 2019 as the record date for determining the holders of Viacom Class A common stock entitled to execute and deliver written consents with respect to the Viacom proposals. Holders of Viacom Class A common stock at the close of business on the Viacom record date will be entitled to give or withhold consent with respect to the Viacom proposals using the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q:

HOW MANY VOTES DOES EACH STOCKHOLDER HAVE?

 

A:

Each holder of CBS Class A common stock is entitled to one vote for each share of CBS Class A common stock held of record as of the close of business on the CBS record date. As of the close of business on the CBS record date, there were [●] outstanding shares of CBS Class A common stock. Holders of CBS Class B common stock are not entitled to vote on the CBS proposals.

Each holder of Viacom Class A common stock is entitled to one vote for each share of Viacom Class A common stock held of record as of the close of business on the Viacom record date. As of the close of business on the Viacom record date, there were [●] outstanding shares of Viacom Class A common stock. Holders of Viacom Class B common stock are not entitled to vote on the Viacom proposals.

 

Q:

WHAT WILL STOCKHOLDERS RECEIVE IN THE MERGER?

 

A:

As a result of the merger, at the effective time, (1) each share of Viacom Class A common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class A common stock and (2) each share of Viacom Class B common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class B common stock.

No fractional shares of ViacomCBS common stock will be issued in the merger, and Viacom stockholders will receive cash in lieu of any fractional shares of ViacomCBS common stock, as described in the section entitled “The Merger Agreement—Exchange of Viacom Common Stock; No Fractional Shares.”

The merger will not result in an exchange of outstanding shares of CBS common stock. However, immediately after the effective time, the name of CBS will be changed to “ViacomCBS Inc.” At the effective time, each share of CBS Class A common stock and each share of CBS Class B common stock issued and outstanding immediately prior to the effective time will remain an issued and outstanding share of Class A common stock and Class B common stock of ViacomCBS, respectively.

As a result of the merger, the separate corporate existence of Viacom will cease, the Viacom common stock will be delisted from NASDAQ, and the ViacomCBS common stock will be the common stock of the combined company. We expect ViacomCBS Class A common stock and ViacomCBS Class B common stock to be listed on NASDAQ after the effective time and, as a result, the CBS common stock will be delisted from the NYSE. We expect that the ViacomCBS Class A common stock and ViacomCBS Class B common stock will be listed on NASDAQ under new ticker symbols “VIACA” and “VIAC,” respectively.

NAI and its affiliates will receive the same amount of ViacomCBS common stock per share of Viacom common stock in the merger as all other Viacom stockholders.

 

Q:

WHAT WILL HOLDERS OF CBS EQUITY AWARDS RECEIVE IN THE MERGER?

 

A:

At the effective time, each CBS equity award that is outstanding immediately prior to the effective time, including those granted to an executive officer, will continue to remain outstanding as a stock-based award

 

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  of ViacomCBS except that the number of underlying shares subject to a ViacomCBS PSU award will be determined based on actual performance, if the applicable performance period has been completed prior to the effective time, or target performance, if the applicable performance period has not yet been completed prior to the effective time. Additionally, awards held by non-employee directors who will not serve on the ViacomCBS board of directors will vest in full immediately prior to the effective time. See the section entitled The Merger—Treatment of Equity Awards.”

 

Q:

WHAT WILL HOLDERS OF VIACOM EQUITY AWARDS RECEIVE IN THE MERGER?

 

A:

At the effective time, each Viacom equity award that is outstanding immediately prior to the effective time will be converted automatically into an award with respect to ViacomCBS common stock, generally on the same terms and conditions, but after providing that (1) the number of shares subject to, and, if applicable, the exercise price of, an award will be adjusted in order to preserve the value of the award following the merger, (2) Viacom PSU awards will convert into ViacomCBS RSU awards with performance conditions measured based on the attainment of actual performance, for any portion of such award for which the applicable performance period has been completed prior to the effective time, and otherwise target performance, and (3) awards held by non-employee directors who will not serve on the ViacomCBS board of directors will vest in full immediately prior to the effective time. See the section entitled The Merger—Treatment of Equity Awards.”

 

Q:

WHAT IS THE VALUE OF THE MERGER CONSIDERATION?

 

A:

The exact value of the merger consideration payable to Viacom stockholders will depend on the price per share of CBS common stock at the effective time, which may be greater than, less than or the same as the price per share of CBS common stock at the time of entry into the merger agreement or the date of this joint consent solicitation statement/prospectus.

Based on the closing price of a share of CBS common stock on the NYSE on August 12, 2019, the last trading day prior to the date of the public announcement of the merger, the implied value of the exchange ratio to Viacom stockholders was approximately $29.14 per share of Viacom Class A common stock and $28.64 per share of Viacom Class B common stock. As of October 15, 2019, the last trading day prior to the date of this joint consent solicitation statement/prospectus, the implied value of the exchange ratio to Viacom stockholders is approximately $24.90 per share of Viacom Class A common stock and $22.70 per share of Viacom Class B common stock; however, as noted above, the prices at the effective time may be greater than, the same as or less than such price quotations.

 

Q:

WHAT WILL BE THE RESPECTIVE OWNERSHIP PERCENTAGES OF FORMER VIACOM STOCKHOLDERS AND CBS STOCKHOLDERS IN VIACOMCBS?

 

A:

Based on the estimated number of shares of CBS common stock and Viacom common stock that are expected to be outstanding immediately prior to the closing, it is anticipated that Viacom stockholders will hold approximately 56% of the shares of ViacomCBS Class A common stock outstanding and approximately 37% of the shares of ViacomCBS Class B common stock outstanding, for a total of approximately 39% of the shares of ViacomCBS common stock outstanding, in each case, immediately following the closing (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options). CBS stockholders as of immediately prior to the merger will hold the remainder of the shares of ViacomCBS common stock immediately following the closing.

Based on the estimated number of shares of CBS common stock and Viacom common stock that are expected to be outstanding immediately prior to the closing, it is anticipated that the NAI Parties will hold, directly or indirectly, approximately 79.4% of the shares of ViacomCBS Class A common stock outstanding and approximately 3.7% of the shares of ViacomCBS Class B common stock outstanding, for a total of approximately 10.1% of the shares of ViacomCBS common stock outstanding, in each case, immediately following the closing (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options). In connection with the

 

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merger, the NAI Parties entered into the Governance Agreement and the Amendment to Settlement Agreement, which provide for certain rights and obligations of the NAI Parties with respect to the composition and independence of the ViacomCBS board of directors and certain matters regarding extraordinary transactions involving ViacomCBS. See the sections entitled Governance Agreement” and “Amendment to Settlement Agreement” below.

 

Q:

WHEN WILL THE MERGER BE COMPLETED?

 

A:

CBS and Viacom currently expect that the merger will be completed by the end of calendar year 2019. Neither CBS nor Viacom can predict, however, the actual date on which the merger will be completed, or whether it will be completed, because the closing is subject to factors beyond each company’s control, including whether or when certain requirements will be complied with or required approvals will be received. See the sections entitled The Merger Agreement—Conditions to Completion of the Merger” and “The Merger—Regulatory Approvals.”

 

Q:

WHAT ARE THE CONDITIONS TO THE COMPLETION OF THE MERGER?

 

A:

In addition to the approval by CBS stockholders entitled to vote of the CBS merger agreement proposal and the CBS stock issuance proposal and the approval by Viacom stockholders entitled to vote of the Viacom merger agreement proposal, the completion of the merger and the other contemplated transactions is subject to the satisfaction and waiver of a number of other conditions, including the receipt of required governmental approvals and consents. See the section entitled “The Merger Agreement—Conditions to the Completion of the Merger.”

 

Q:

WHAT EFFECT WILL THE MERGER HAVE ON VIACOM AND CBS?

 

A:

Upon the closing, the separate corporate existence of Viacom will cease, shares of Viacom common stock will no longer be outstanding, and each share of Viacom common stock will be converted into the merger consideration as described in the section entitled “The Merger Agreement—Merger Consideration.” If you are a Viacom stockholder, you will no longer be a stockholder of Viacom immediately following the merger, but you will have an interest in the businesses and assets of both CBS and Viacom through your ownership of ViacomCBS common stock.

Immediately after the effective time, ViacomCBS common stock will be the common stock of the combined company, and we expect ViacomCBS Class A common stock and ViacomCBS Class B common stock to be listed on NASDAQ after the effective time, under new ticker symbols “VIACA” and “VIAC,” respectively. At the effective time, each share of CBS Class A common stock and each share of CBS Class B common stock issued and outstanding immediately prior to the effective time will remain an issued and outstanding share of Class A common stock and Class B common stock of ViacomCBS, respectively.

 

Q:

WHAT ARE THE RECOMMENDATIONS OF THE CBS SPECIAL COMMITTEE AND THE CBS BOARD OF DIRECTORS?

 

A:

At a meeting held on August 13, 2019, the CBS special committee unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) approved the merger agreement and the contemplated transactions, including the merger, and (3) recommended that the CBS board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger and the stock issuance.

At a meeting of the CBS board of directors held on August 13, 2019, following the meeting of the CBS special committee, the members of the CBS board of directors who were present at such meeting unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders

 

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for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws and (3) recommended that the CBS stockholders entitled to vote adopt the merger agreement and approve the stock issuance. The members of the CBS board of directors who were present at the meeting held on August 13, 2019 were Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman and Frederick O. Terrell, each of whom is a member of the CBS special committee and is unaffiliated with NAI, and who collectively constitute more than two-thirds of the members of the CBS board of directors unaffiliated with NAI. The three members of the CBS board of directors who are not members of the CBS special committee, Shari E. Redstone, Robert N. Klieger and Strauss Zelnick, delivered waivers of notice prior to the meeting and were not present at the meeting. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The CBS board of directors recommends that CBS stockholders entitled to vote approve the CBS proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q:

WHAT ARE THE RECOMMENDATIONS OF THE VIACOM SPECIAL COMMITTEE AND THE VIACOM BOARD OF DIRECTORS?

 

A:

At a meeting held on August 13, 2019, the Viacom special committee unanimously (1) determined that it is in the best interests of Viacom and its stockholders, and declared it advisable that Viacom enter into the merger agreement and consummate the contemplated transactions, including the merger, (2) recommended that the Viacom board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger, and (3) recommended that Viacom stockholders entitled to vote adopt the merger agreement.

At a meeting of the Viacom board of directors held on August 13, 2019, following the meeting of the Viacom special committee, the members of the Viacom board of directors who were present at such meeting (each of whom is unaffiliated with NAI) unanimously (1) determined that entering into the merger agreement and consummating the contemplated transactions are in the best interests of Viacom and its stockholders, (2) approved and declared advisable the merger agreement and the consummation of the contemplated transactions, including the merger, and (3) recommended that Viacom stockholders entitled to vote adopt the merger agreement. The members of the Viacom board of directors who were present at the meeting were Robert M. Bakish, Thomas J. May, Judith A. McHale, Ronald L. Nelson, Charles E. Phillips, Jr., Nicole Seligman and Cristiana Falcone Sorrell. Two members of the Viacom board of directors, Shari E. Redstone and Deborah Norville, recused themselves from the meeting and were not in attendance. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The Viacom board of directors recommends that Viacom stockholders entitled to vote approve the Viacom proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q:

WHAT CBS STOCKHOLDER APPROVAL IS REQUIRED TO APPROVE THE MERGER?

 

A:

The approval by the holders of a majority of the outstanding shares of CBS Class A common stock of (1) the adoption of the merger agreement and the approval of the merger and (2) the stock issuance is required for the merger to be completed. As of the CBS record date, there were [●] shares of CBS Class A common stock outstanding and entitled to consent with respect to such proposals.

 

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Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, execute and deliver (or cause to be executed and delivered) a written consent with respect to a majority of the issued and outstanding shares of CBS Class A common stock adopting the merger agreement and approving the merger, approving the stock issuance, adopting the A&R Charter and adopting the A&R Bylaws (which we refer to as the “NAI CBS written consent”) unless an adverse recommendation change as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination” has occurred and not been rescinded.

As of the CBS record date, the NAI Parties beneficially owned and were entitled to consent with respect to [●] shares of CBS Class A common stock, representing approximately [●]% of the shares of CBS Class A common stock outstanding on that date. Because the NAI Parties are the beneficial holders of a majority of the CBS Class A common stock outstanding as of the CBS record date, the delivery of the NAI CBS written consent will constitute receipt by CBS of the CBS stockholder approval with respect to the adoption of the merger agreement, the approval of the merger, the approval of the stock issuance, the adoption of the A&R Charter and the adoption of the A&R Bylaws regardless of the delivery or withholding of consent by any other CBS stockholder. Therefore, CBS expects to receive a number of consents sufficient to adopt the merger agreement and approve the merger and to approve the stock issuance.

The delivery, change or revocation of a written consent by any other CBS stockholder with respect to the CBS proposals after the delivery of the NAI CBS written consent will not have any effect.

 

Q:

WHAT VIACOM STOCKHOLDER APPROVAL IS REQUIRED TO APPROVE THE MERGER?

 

A:

The approval by the holders of a majority of the outstanding shares of Viacom Class A common stock of the adoption of the merger agreement and the approval of the merger is required for the merger to be completed. As of the Viacom record date, there were [●] shares of Viacom Class A common stock outstanding and entitled to consent with respect to such proposal.

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, execute and deliver (or cause to be executed and delivered) a written consent with respect to a majority of the issued and outstanding shares of Viacom Class A common stock adopting the merger agreement and approving the merger (which we refer to as the “NAI Viacom written consent”) unless an adverse recommendation change as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination” has occurred and not been rescinded.

As of the Viacom record date, the NAI Parties beneficially owned and were entitled to consent with respect to [●] shares of Viacom Class A common stock, representing approximately [●]% of the shares of Viacom Class A common stock outstanding on that date. Because the NAI Parties are the beneficial holders of a majority of the Viacom Class A common stock outstanding as of the Viacom record date, the delivery of the NAI Viacom written consent will constitute receipt by Viacom of the Viacom stockholder approval with respect to the adoption of the merger agreement and approval of the merger, regardless of the delivery or withholding of consent by any other Viacom stockholder. Therefore, Viacom expects to receive a number of consents sufficient to adopt the merger agreement and approve the merger.

The delivery, change or revocation of a written consent by any other Viacom stockholder with respect to the Viacom proposals after the delivery of the NAI Viacom written consent will not have any effect.

 

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Q:

ARE THERE ANY RISKS RELATING TO THE MERGER, VIACOM’S BUSINESS OR VIACOMCBS THAT CBS STOCKHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO APPROVE THE CBS PROPOSALS?

 

A:

Yes. Before making any decision on whether to give or withhold consent, CBS stockholders are urged to read the information contained in the section entitled “Risk Factors” carefully and in its entirety. CBS stockholders should also read and carefully consider the risk factors of CBS and Viacom that are incorporated by reference into this joint consent solicitation statement/prospectus.

 

Q:

ARE THERE ANY RISKS RELATING TO THE MERGER, CBS’ BUSINESS OR VIACOMCBS THAT VIACOM STOCKHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO APPROVE THE VIACOM PROPOSALS?

 

A:

Yes. Before making any decision on whether to give or withhold consent, Viacom stockholders are urged to read the information contained in the section entitled “Risk Factors” carefully and in its entirety. Viacom stockholders should also read and carefully consider the risk factors of CBS and Viacom that are incorporated by reference into this joint consent solicitation statement/prospectus.

 

Q:

DO ANY OF THE CBS EXECUTIVE OFFICERS OR DIRECTORS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM THOSE OF CBS STOCKHOLDERS?

 

A:

Yes. The CBS executive officers and directors have interests in the merger that are different from, or in addition to, the interests of CBS stockholders generally. See the section entitled The Merger—Interests of CBS Executive Officers and Directors in the Merger.” The members of the CBS board of directors who recommended that CBS stockholders entitled to vote approve the CBS proposals and the CBS special committee were aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating the merger agreement and the contemplated transactions, and in making the CBS board of directors’ recommendation that CBS stockholders entitled to vote adopt the merger agreement and approve the merger and the stock issuance.

 

Q:

DO ANY OF THE VIACOM EXECUTIVE OFFICERS OR DIRECTORS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM THOSE OF VIACOM STOCKHOLDERS?

 

A:

Yes. The Viacom executive officers and directors have interests in the merger that are different from, or in addition to, the interests of Viacom stockholders generally. See the section entitled The Merger—Interests of Viacoms Executive Officers and Directors in the Merger.” The members of the Viacom board of directors who recommended that Viacom stockholders entitled to vote approve the Viacom proposals and the Viacom special committee were aware of and considered these interests to the extent such interests existed at the time, among other matters, in evaluating the merger agreement and the contemplated transactions, and in making the Viacom board of directors’ recommendation that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger.

 

Q:

WHO WILL BE THE MANAGEMENT OF VIACOMCBS?

 

A:

The A&R Bylaws will provide that, among other things, for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, the executive officers of ViacomCBS will include (1) Mr. Bakish, the current President and Chief Executive Officer of Viacom, who will serve as President and Chief Executive Officer of ViacomCBS, (2) Ms. Spade, the current Executive Vice President, Chief Financial Officer of CBS, who will serve as Executive Vice President, Chief Financial Officer of ViacomCBS, and (3) Ms. D’Alimonte, the current Executive Vice President, General Counsel and Secretary of Viacom, who will serve as Executive Vice President, General Counsel and Secretary of ViacomCBS. In addition, pursuant to the A&R Bylaws,

 

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  for a period of 15 months following the closing with respect to Mr. Ianniello and for a period of two years following the closing with respect to Ms. Franco, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, Mr. Ianniello, the current President and Acting Chief Executive Officer of CBS, will serve as Chairman and Chief Executive Officer of the CBS business of ViacomCBS and Ms. Franco, the current Executive Vice President, General Counsel of CBS, will serve as Executive Vice President and General Counsel of the CBS business of ViacomCBS. For further details on the management of ViacomCBS and governance, see the section entitled “The Merger Agreement—Governance Following Completion of the Merger.”

 

Q:

WHAT ARE THE EFFECTS OF THE AMENDMENT TO SETTLEMENT AGREEMENT?

 

A:

Concurrently with the execution of the merger agreement, CBS, the NAI Parties and certain other parties listed therein entered into the Amendment to Settlement Agreement. The Amendment to Settlement Agreement, which will become effective at the effective time, provides for the deletion of certain provisions in the Settlement Agreement relating to the composition of the CBS board of directors, CBS’ independence and extraordinary transactions involving CBS, which matters will be governed by the Governance Agreement from and after the effective time with respect to ViacomCBS. In the event that the merger agreement is terminated prior to the effective time for any reason, the Amendment to Settlement Agreement will be deemed null and void. The Amendment to Settlement Agreement is described in more detail in the section of this joint consent solicitation statement/prospectus entitled “Amendment to Settlement Agreement.”

 

Q:

GIVEN THAT THE DELIVERY OF THE NAI WRITTEN CONSENTS WILL CONSTITUTE THE CBS STOCKHOLDER APPROVAL AND THE VIACOM STOCKHOLDER APPROVAL, RESPECTIVELY, WHY ARE THE PARTIES SEEKING CONSENTS FROM ALL HOLDERS OF CLASS A COMMON STOCK OF CBS AND VIACOM, RESPECTIVELY?

 

A:

Under applicable SEC guidance, a company may seek a commitment from principal security holders of a target to vote in favor of a business combination transaction and register the securities to be offered and sold in the transaction if, among other things, votes will also be solicited from target stockholders who have not entered into such commitments.

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties, the principal security holders of each of CBS and Viacom, pursuant to which the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, execute and deliver written consents with respect to a majority of the issued and outstanding shares of CBS Class A common stock and a majority of the issued and outstanding shares of Viacom Class A common stock. Because the NAI Parties have agreed to deliver written consents in favor of the merger, CBS and Viacom are seeking written consents from all CBS stockholders and all Viacom stockholders, respectively, who are entitled to vote on such matters, in accordance with the applicable SEC guidance referred to above. Nevertheless, the delivery of the NAI CBS written consent will constitute receipt by CBS of the CBS stockholder approval, regardless of the delivery or withholding of consent by any other CBS stockholder, and the delivery of the NAI Viacom written consent will constitute receipt by Viacom of the Viacom stockholder approval, regardless of the delivery or withholding of consent by any other Viacom stockholder.

The delivery, change or revocation of a written consent by any other CBS stockholder with respect to the CBS proposals, or by any other Viacom stockholder with respect to the Viacom proposals, after the delivery of the NAI written consents will not have any effect.

 

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Q:

WHY AM I BEING ASKED TO CONSIDER AND DELIVER A WRITTEN CONSENT ON A PROPOSAL TO APPROVE, ON A NON-BINDING, ADVISORY BASIS, CERTAIN MERGER-RELATED COMPENSATION?

 

A:

Under SEC rules, each of CBS and Viacom is required to seek a non-binding, advisory vote with respect to certain compensation that will or may be payable to the CBS and Viacom named executive officers set forth in the CBS 402(t) table and the Viacom 402(t) table set forth under the sections entitled “The Merger—Quantification of Potential Payments and Benefits to CBS’ Named Executive Officers in Connection with the Merger” and “The Merger—Quantification of Potential Payments and Benefits to Viacom’s Named Executive Officers in Connection with the Merger,” respectively. As these votes are only advisory in nature, they will not be binding upon CBS, Viacom or ViacomCBS. Accordingly, such compensation will or may be paid to such named executive officers in accordance with the terms of their respective compensation agreements and arrangements even if the proposals are not approved by CBS stockholders entitled to vote or Viacom stockholders entitled to vote.

 

Q:

WHAT DO I NEED TO DO NOW?

 

A:

If you are a holder of CBS Class A common stock at the close of business on the CBS record date, or a holder of Viacom Class A common stock at the close of business on the Viacom record date, and after carefully reading and considering the information contained in this joint consent solicitation statement/prospectus, you have decided that you wish to vote your shares, you may execute and return your written consent to CBS or Viacom, as applicable, in accordance with the instructions provided in this joint consent solicitation statement/prospectus.

 

Q:

HOW DO I RETURN MY WRITTEN CONSENT?

 

A:

If you are a holder of CBS Class A common stock at the close of business on the CBS record date, or a holder of Viacom Class A common stock at the close of business on the Viacom record date, and after carefully reading and considering the information contained in this joint consent solicitation statement/prospectus, you wish to return your written consent, please complete, date and sign the enclosed written consent and promptly return it before the earlier of the delivery of the NAI written consents and the applicable consent deadline to CBS or Viacom, as applicable, at the addresses below. You may also submit your written consent online by visiting proxyvote.com and following the instructions described therein.

 

For holders of CBS Class A common stock:

 

CBS Corporation

c/o Broadridge

51 Mercedes Way

Edgewood, NY 11717

  

For holders of Viacom Class A common stock:

 

Viacom Inc.

c/o Broadridge

51 Mercedes Way

Edgewood, NY 11717

If you are a beneficial owner and hold your shares in “street name” through a bank or broker, you will receive separate instructions from such bank or broker describing how to submit your written consent. Please check with your bank or broker and follow the consent instructions provided by your bank or broker with these materials. Consent instructions for shares of Viacom Class A common stock held in the Viacom 401(k) plan or shares of CBS Class A common stock held in the CBS 401(k) plan may be submitted through the same methods described above for tabulation by the relevant plan’s trustee (who delivers or withholds consents or abstains on behalf of plan participants) of timely submitted consents.

Neither CBS nor Viacom will be holding a stockholders’ meeting to consider the CBS proposals or the Viacom proposals, as applicable, and therefore you will be unable to vote in person by attending a stockholders’ meeting.

 

Q:

SHOULD I DO ANYTHING AT THIS TIME WITH MY SHARES OF VIACOM COMMON STOCK HELD IN BOOK-ENTRY FORM TO RECEIVE THE MERGER CONSIDERATION?

 

A:

No. If you are a registered holder of Viacom common stock on the records of its transfer agent, or if you are a beneficial holder of Viacom common stock—that is, in street name through a bank or broker—you will

 

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  not be required to take any action. All Viacom common stock, registered or in street name, is in book-entry form. As promptly as practicable after the effective time, ViacomCBS will cause the exchange agent to effect the exchange of your registered shares for the merger consideration. Similarly, if you are a beneficial holder of Viacom common stock, your bank or broker will effect the exchange of the shares of Viacom common stock you own beneficially for the merger consideration. In either case, there is nothing for you to do. No fractional shares of ViacomCBS common stock will be issued in the merger, and Viacom stockholders will receive cash in lieu of any fractional shares of ViacomCBS common stock, as described in the section entitled “The Merger Agreement—Exchange of Viacom Common Stock; No Fractional Shares.”

 

Q:

WHAT HAPPENS IF I DO NOT RETURN MY WRITTEN CONSENT?

 

A:

If you are a holder of CBS Class A common stock at the close of business on the CBS record date and you do not return your written consent, that will have the same effect as a vote against the CBS proposals. However, because the NAI Parties are required to deliver written consents approving the CBS merger agreement proposal, the CBS stock issuance proposal, the CBS A&R Charter proposal and the CBS A&R Bylaws proposal pursuant to the Support Agreement, and the NAI Parties are the beneficial holders of a majority of the CBS Class A common stock outstanding as of the CBS record date, a failure of any other holder of CBS Class A common stock to deliver a written consent or any such holder of CBS Class A common stock withholding consent will not have any effect on the approval of such proposals.

If you are a holder of Viacom Class A common stock at the close of business on the Viacom record date and you do not return your written consent, that will have the same effect as a vote against the Viacom proposals. However, because the NAI Parties are required to deliver written consents approving the Viacom merger agreement proposal pursuant to the Support Agreement, and the NAI Parties are the beneficial holders of a majority of the Viacom Class A common stock outstanding as of the Viacom record date, a failure of any other holder of Viacom Class A common stock to deliver a written consent or any such holder of Viacom Class A common stock withholding consent will not have any effect on the approval of the Viacom merger agreement proposal.

 

Q:

IF MY SHARES OF CBS CLASS A COMMON STOCK OR VIACOM CLASS A COMMON STOCK ARE HELD IN STREET NAME, WILL MY BANK OR BROKER CONSENT FOR ME?

 

A:

No. If your shares of CBS Class A common stock or Viacom Class A common stock are held in street name, you must instruct your bank or broker whether you consent to or withhold consent from any particular proposal. You should follow the instructions provided by your bank or broker.

 

Q:

WHAT IF I AM A RECORD HOLDER OF CBS CLASS A COMMON STOCK OR VIACOM CLASS A COMMON STOCK AND I RETURN A SIGNED WRITTEN CONSENT WITHOUT INDICATING A DECISION WITH RESPECT TO THE CBS PROPOSALS OR THE VIACOM PROPOSALS?

 

A:

If you are a holder of CBS Class A common stock at the close of business on the CBS record date, or a holder of Viacom Class A common stock at the close of business on the Viacom record date, and you return a signed written consent without indicating a decision with respect to the CBS proposals or the Viacom proposals, as applicable, that will have the same effect as a vote for the CBS proposals or the Viacom proposals, as applicable.

 

Q:

WHAT IS THE DEADLINE FOR SUBMISSION OF WRITTEN CONSENTS?

 

A:

CBS has set [●], 2019 as the CBS consent deadline. CBS reserves the right to extend the CBS consent deadline beyond [●], 2019. Any such extension may be made without notice to CBS stockholders.

 

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Viacom has set [●], 2019 as the Viacom consent deadline. Viacom reserves the right to extend the Viacom consent deadline beyond [●], 2019. Any such extension may be made without notice to Viacom stockholders.

However, under the Support Agreement, the NAI Parties have agreed to deliver the NAI written consents promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. The delivery of the NAI CBS written consent will constitute receipt by CBS of the CBS stockholder approval and the delivery of the NAI Viacom written consent will constitute receipt by Viacom of the Viacom stockholder approval. Therefore, any failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, in each case, by any other CBS stockholder or Viacom stockholder entitled to vote with respect to the CBS proposals or the Viacom proposals, respectively, after the delivery of the NAI written consents, will not have any effect.

 

Q:

CAN I CHANGE OR REVOKE MY WRITTEN CONSENT?

 

A:

Yes. If you are a holder of CBS Class A common stock at the close of business on the CBS record date, you may change or revoke your consent to the CBS proposals at any time before the earlier of the delivery of the NAI CBS written consent and the CBS consent deadline. Consents from holders of shares of CBS Class A common stock held in the CBS 401(k) plan may be revoked in the same manner.

If you are a holder of Viacom Class A common stock at the close of business on the Viacom record date, you may change or revoke your consent to the Viacom proposals at any time before the earlier of the delivery of the NAI Viacom written consent and the Viacom consent deadline. Consents from holders of shares of Viacom Class A common stock held in the Viacom 401(k) plan may be revoked in the same manner.

Under the Support Agreement, the NAI Parties have agreed to deliver the NAI written consents promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. The delivery of the NAI CBS written consent will constitute receipt by CBS of the CBS stockholder approval and the delivery of the NAI Viacom written consent will constitute receipt by Viacom of the Viacom stockholder approval. Therefore, the delivery, change or revocation of a written consent, in each case, by any other CBS stockholder or Viacom stockholder entitled to vote with respect to the CBS proposals or the Viacom proposals, respectively, after the delivery of the NAI written consents, will not have any effect.

 

Q:

WHAT IF I HOLD SHARES IN BOTH CBS AND VIACOM?

 

A:

If you are both a stockholder of CBS and a stockholder of Viacom, you will receive two separate packages of consent solicitation materials. A written consent with respect to the CBS proposals will not count as a written consent with respect to the Viacom proposals, and a written consent with respect to the Viacom proposals will not count as a written consent with respect to the CBS proposals. Therefore, if you are a holder of Class A common stock of CBS and Viacom, as the case may be, please separately return a written consent for each of your shares of CBS Class A common stock and your shares of Viacom Class A common stock.

 

Q:

WHERE CAN I FIND THE RESULTS OF THE SOLICITATION OF CBS WRITTEN CONSENTS AND THE SOLICITATION OF VIACOM WRITTEN CONSENTS?

 

A:

In addition to any other notifications that may be required by applicable law, each of Viacom and CBS intends to file the final results of its respective solicitation of written consents with the SEC on a Current Report on Form 8-K.

 

Q:

ARE STOCKHOLDERS ENTITLED TO APPRAISAL RIGHTS?

 

A:

No. CBS stockholders and Viacom stockholders are not entitled to appraisal rights in connection with the merger or the other contemplated transactions. See the section entitled The Merger—No Appraisal or Dissenters Rights.”

 

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Q:

WHAT ARE THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?

 

A:

It is a condition to each party’s obligation to complete the merger that each of CBS and Viacom receive an opinion of its respective outside counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, it is expected that U.S. holders (as defined in the section entitled “Material U.S. Federal Income Tax Consequences”) of shares of Viacom common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the receipt of ViacomCBS common stock in exchange for Viacom common stock in the merger (other than gain or loss, if any, with respect to any cash received in lieu of a fractional share of ViacomCBS common stock).

Viacom stockholders should consult their own tax advisors as to the particular consequences of the merger to them, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws. For more information regarding the material U.S. federal income tax consequences of the merger, see the section entitled Material U.S. Federal Income Tax Consequences.”

 

Q:

WILL I STILL BE PAID DIVIDENDS PRIOR TO THE MERGER?

 

A:

CBS may declare and pay one regular quarterly cash dividend per quarter in an amount per share of up to $0.18 per quarter with a record date consistent with the prior record dates for each quarterly period. Viacom may declare and pay one regular quarterly cash dividend per quarter in an amount per share of up to $0.20 per quarter and with a record date consistent with the prior record dates for each quarterly period.

CBS and Viacom are required by the merger agreement to coordinate their record and payment dates for their regular quarterly dividends to ensure that if CBS stockholders or Viacom stockholders, as the case may be, receive a regular quarterly dividend with respect to the calendar quarter in which the closing occurs, then the Viacom stockholders or CBS stockholders, respectively, also receive a regular quarterly dividend with respect to such calendar quarter, in each case prior to the closing date. For more information regarding the payment of dividends, see the section entitled “The Merger AgreementCovenants of the Parties.”

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

 

A:

If the merger is not completed, Viacom stockholders will retain their shares of Viacom common stock and will not receive any consideration for their shares of Viacom common stock. Instead, CBS and Viacom will remain separate public companies and their shares of common stock will continue to be listed and traded separately on the NYSE and NASDAQ, respectively.

 

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS?

 

A:

If you have questions about the merger, the solicitation of CBS written consents or the solicitation of Viacom written consents, or if you need to obtain copies of this joint consent solicitation statement/prospectus or other documents incorporated by reference into this joint consent solicitation statement/prospectus, you may contact the appropriate contact listed below. You will not be charged for any of the documents you request. Each of CBS and Viacom is soliciting consents on its own behalf. CBS and Viacom have engaged MacKenzie Partners, Inc. (which we refer to as “MacKenzie”) as an information agent, whose contact information is as follows:

MacKenzie Partners, Inc.

1407 Broadway

New York, NY 10018

Toll-Free: (888) 410-7851

Viacom-CBS@mackenziepartners.com

To ensure timely delivery, any request should be made no later than [●], 2019.

 

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If a bank or broker holds your shares, you should also contact your bank or broker for additional information.

 

Q:

WHERE CAN I FIND MORE INFORMATION ABOUT CBS AND VIACOM?

 

A:

You can find more information about CBS and Viacom from the sources described under the section entitled “Where You Can Find More Information.”

 

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SUMMARY

This summary highlights selected material information included in this joint consent solicitation statement/prospectus. You should read this joint consent solicitation statement/prospectus and its Annexes and the other documents referred to in this joint consent solicitation statement/prospectus in their entirety, because the information in this section may not provide all of the information that might be important to you. Additional information about CBS and Viacom is also contained in the Annexes to, and the documents incorporated by reference into, this joint consent solicitation statement/prospectus. For a description of, and instructions as to how to obtain, this information, see the section entitled “Where You Can Find More Information.” Each item in this summary includes a page reference directing you to a more complete description of that item.

Information About the Companies (page 60)

CBS

CBS was organized under the laws of the State of Delaware in 1986. CBS is a mass media company with operations in a number of segments. CBS’ Entertainment segment is composed of the CBS® Television Network; CBS Television Studios®; CBS Global Distribution Group (composed of CBS Studios International and CBS Television Distribution); Network 10; CBS Interactive®; CBS Sports Network®, CBS’ cable network focused on college athletics and other sports; CBS Films®; and CBS’ direct-to-consumer digital streaming services, CBS All Access®, CBSN®, CBS Sports HQ®, ET Live® and 10 All Access®. CBS’ Cable Networks segment is composed of Showtime Networks, which operates premium subscription program services, Showtime® (including its direct-to-consumer digital streaming subscription offering), The Movie Channel® and Flix®, as well as basic cable program services, Pop and Smithsonian Channel (including its direct-to-consumer digital streaming subscription offering). CBS’ Publishing segment is composed of Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster®, Pocket Books®, Scribner®, Gallery Books® and Atria Books®. CBS’ Local Media segment is composed of CBS Television Stations, CBS’ 29 owned broadcast television stations; and CBS Local Digital Media, which operates local websites including content from CBS’ television stations.

CBS’ principal executive offices are located at 51 West 52nd Street, New York, NY 10019 and its phone number is (212) 975-4321. CBS’ website address is www.cbscorporation.com. Information contained on CBS’ website does not constitute part of this joint consent solicitation statement/prospectus. CBS Class A common stock and CBS Class B common stock are currently listed and traded on the NYSE under the symbols “CBS.A” and “CBS,” respectively. Additional information about CBS is included in documents incorporated by reference into this joint consent solicitation statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

Viacom

Viacom was organized as a Delaware corporation in 2005 in connection with Viacom’s separation from CBS, which was effective January 1, 2006. Viacom creates entertainment experiences that drive conversation and culture around the world. Through television, film, digital media, live events, merchandise and solutions, Viacom’s brands connect with diverse, young and young at heart audiences in more than 180 countries. Viacom operates through two reportable segments: Media Networks and Filmed Entertainment. The Media Networks segment provides entertainment content, services and related branded products for consumers in targeted demographics attractive to advertisers, content distributors and retailers through Viacom’s global media brands including flagship brands Nickelodeon®, MTV®, BET®, Comedy Central® and Paramount Network®, as well as Pluto TV, Viacom’s free streaming television platform. The Filmed Entertainment segment develops, produces, finances, acquires and distributes films, television programming and other entertainment content through its



 

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Paramount Pictures®, Paramount Players ®, Paramount Animation® and Paramount Television® divisions, in various markets and media worldwide, for itself and for third parties. The Filmed Entertainment segment partners on various projects with key Viacom brands, including Nickelodeon Movies, MTV Films® and BET Films.

Viacom’s principal executive offices are located at 1515 Broadway, New York, NY 10036 and its telephone number is (212) 258-6000. Viacom’s website address is www.viacom.com. Information contained on Viacom’s website does not constitute part of this joint consent solicitation statement/prospectus. Viacom Class A common stock and Viacom Class B common stock are listed and traded on NASDAQ under the symbols “VIA” and “VIAB,” respectively. Additional information about Viacom is included in documents incorporated by reference into this joint consent solicitation statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

NAI

NAI, which is not a party to the merger agreement, is a world leader in the motion picture exhibition industry operating more than 950 movie screens in the U.S., U.K. and Latin America. NAI delivers a superior entertainment experience in theatres around the world under its Showcase, Cinema de Lux, Multiplex, SuperLux and UCI brands. Based in Norwood, Massachusetts, NAI is a closely held company operating under the leadership of the Redstone family. NAI is the controlling stockholder of both Viacom and CBS.

NAI’s principal executive offices are located at 846 University Avenue, Norwood, MA 02062 and its telephone number is (781) 461-1600. NAI’s website address is www.nationalamusements.com. Information contained on NAI’s website does not constitute part of this joint consent solicitation statement/prospectus.

The Merger and the Merger Agreement (pages 76 and 183)

On August 13, 2019, CBS and Viacom entered into an agreement and plan of merger pursuant to which CBS and Viacom agreed to combine their respective businesses. The merger agreement provides that, upon the terms and subject to the conditions set forth therein, Viacom will merge with and into CBS, with CBS continuing as the surviving company. At the effective time, the name of the combined company will be changed to “ViacomCBS Inc.”

On October 16, 2019, CBS and Viacom entered into an amendment to the agreement and plan of merger pursuant to which CBS and Viacom agreed that the ViacomCBS common stock will be listed on NASDAQ following the effective time.

The merger agreement and the contemplated transactions were approved by the unanimous vote of the members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee), acting upon the unanimous recommendation of the CBS special committee, and by the unanimous vote of the members of the Viacom board of directors who were present at a meeting thereof (each of whom is unaffiliated with NAI), acting upon the unanimous recommendation of the Viacom special committee.

The terms and conditions of the merger are contained in the agreement and plan of merger and the merger agreement amendment, which are included as Annex B and Annex C, respectively, to this joint consent solicitation statement/prospectus. You should read the agreement and plan of merger and the merger agreement amendment carefully as they are the legal documents that govern the merger.



 

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Merger Consideration (page 184)

At the effective time, (1) each share of Viacom Class A common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class A common stock and (2) each share of Viacom Class B common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class B common stock.

No fractional shares of ViacomCBS common stock will be issued in the merger, and Viacom stockholders will receive cash in lieu of any such fractional shares as described in the section entitled “The Merger Agreement—Exchange of Viacom Common Stock; No Fractional Shares.”

The NAI Parties and their affiliates will receive the same amount of ViacomCBS common stock per share of Viacom common stock in the merger as all other Viacom stockholders.

NAI Support Agreement (page 202)

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, unless an adverse recommendation change as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination” below has occurred and not been rescinded, execute and deliver (or cause to be executed and delivered) (1) a written consent with respect to a majority of the issued and outstanding shares of CBS Class A common stock adopting the merger agreement and approving the merger, approving the stock issuance, adopting the A&R Charter and adopting the A&R Bylaws and (2) a written consent with respect to a majority of the issued and outstanding shares of Viacom Class A common stock adopting the merger agreement and approving the merger.

As of the CBS record date and the Viacom record date, the NAI Parties beneficially owned approximately [●]% of the shares of CBS Class A common stock outstanding and [●]% of the shares of Viacom Class A common stock outstanding, respectively. The delivery of the NAI CBS written consent and NAI Viacom written consent will constitute receipt by CBS and Viacom of the CBS stockholder approval and the Viacom stockholder approval, respectively.

CBS Solicitation of Written Consents (page 62)

The merger agreement provides that CBS will seek the CBS stockholder approval pursuant to this joint consent solicitation statement/prospectus, and CBS will not call or convene any meeting of its stockholders in connection with seeking the CBS stockholder approval. Holders of CBS Class A common stock are being asked to (1) adopt the merger agreement and approve the merger, (2) approve the stock issuance, (3) adopt the A&R Charter and (4) adopt the A&R Bylaws, as well as (5) approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the CBS named executive officers set forth in the CBS 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to CBS’ Named Executive Officers in Connection with the Merger,” by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Only holders of CBS Class A common stock of record at the close of business on [●], 2019, the CBS record date, will be entitled to execute and deliver a written consent. Under the CBS charter and the DGCL, each holder of CBS Class A common stock is entitled to one vote for each share of CBS Class A common stock held as of



 

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the CBS record date. Approval of each of the CBS proposals requires the execution and delivery to CBS of one or more written consents approving the CBS proposals by the holders of a majority of the outstanding shares of CBS Class A common stock.

Concurrently with the execution of the merger agreement, CBS and Viacom entered into a support agreement (which we refer to as the “Support Agreement”) with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties have agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, deliver written consents with respect to a majority of the issued and outstanding shares of CBS Class A common stock approving the CBS merger agreement proposal, the CBS stock issuance proposal, the CBS A&R Charter proposal and the CBS A&R Bylaws proposal. In addition, the NAI Parties have indicated that they intend to deliver a written consent “FOR” the CBS advisory compensation proposal (which we refer to as the “NAI CBS compensation proposal written consent”) concurrently with the delivery of the NAI CBS written consent. As of August 13, 2019, the NAI Parties beneficially owned approximately 78.9% of the shares of CBS Class A common stock outstanding. Under the terms of the Support Agreement, the NAI Parties are generally prohibited from transferring ownership of CBS Class A common stock prior to the earlier of the closing and the termination of the merger agreement in accordance with its terms if, after such transfer of ownership, the NAI Parties in the aggregate would beneficially own less than a majority of the issued and outstanding shares of CBS Class A common stock, and CBS is restricted from issuing new voting shares until the record date for its stockholder approval. Because the CBS proposals require the approval of a majority of the outstanding shares of CBS Class A common stock and the NAI Parties will be the beneficial holders of a majority of the outstanding shares of CBS Class A common stock as of the CBS record date, the delivery of the NAI CBS written consent and the NAI CBS compensation proposal written consent will constitute receipt by CBS of the stockholder approvals required for the CBS proposals.

As of the CBS record date, there were [●] shares of CBS Class A common stock outstanding and entitled to consent with respect to the CBS proposals, of which executive officers and directors of CBS and their affiliates owned and were entitled to consent with respect to [●] shares of CBS Class A common stock (excluding shares owned by the NAI Parties), representing approximately [●]% of the shares of CBS Class A common stock outstanding on that date. 

You may consent to the CBS proposals with respect to your shares of CBS Class A common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to CBS before the earlier of the delivery of the NAI CBS written consent and the CBS consent deadline. Your consent to the CBS proposals may be changed or revoked at any time before the earlier of the delivery of the NAI CBS written consent and the CBS consent deadline. Under the Support Agreement, the NAI Parties have agreed to deliver the NAI CBS written consent promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. Because the delivery of the NAI CBS written consent will constitute receipt by CBS of the CBS stockholder approval, the delivery, change or revocation of a written consent by any other CBS stockholder entitled to vote with respect to the CBS proposals after the delivery of the NAI CBS written consent will not have any effect. If you wish to change or revoke a previously given consent in accordance with the above, you may do so by mailing a notice of revocation or a new written consent with a later date to CBS Corporation, c/o Broadridge, P.O. Box 9111, Farmingdale, NY 11735-9543 or by submitting a new written consent with a later date online by visiting proxyvote.com and following the instructions described therein.



 

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Viacom Solicitation of Written Consents (page 71)

The merger agreement provides that Viacom will seek the Viacom stockholder approval pursuant to this joint consent solicitation statement/prospectus, and Viacom will not call or convene any meeting of its stockholders in connection with seeking the Viacom stockholder approval. Holders of Viacom Class A common stock are being asked to (1) adopt the merger agreement and approve the merger, as well as (2) approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the Viacom named executive officers set forth in the Viacom 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to Viacom’s Named Executive Officers in Connection with the Merger” by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Only holders of Viacom Class A common stock of record at the close of business on [●], 2019, the Viacom record date, will be entitled to execute and deliver a written consent. Under the Viacom charter and the DGCL, each holder of Viacom Class A common stock is entitled to one vote for each share of Viacom Class A common stock held as of the Viacom record date. Approval of each of the Viacom proposals requires the execution and delivery to Viacom of one or more written consents approving the Viacom proposals by the holders of a majority of the outstanding shares of Viacom Class A common stock.

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties have agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, deliver written consents with respect to a majority of the issued and outstanding shares of Viacom Class A common stock approving the Viacom merger agreement proposal. In addition, the NAI Parties have indicated that they intend to deliver a written consent “FOR” the Viacom advisory compensation proposal (which we refer to as the “NAI Viacom compensation proposal written consent”) concurrently with the delivery of the NAI Viacom written consent. As of August 13, 2019, the NAI Parties beneficially owned approximately 79.8% of the shares of Viacom Class A common stock outstanding. Under the terms of the Support Agreement, the NAI Parties are generally prohibited from transferring ownership of Viacom Class A common stock prior to the earlier of the closing and the termination of the merger agreement in accordance with its terms if, after such transfer of ownership, the NAI Parties in the aggregate would beneficially own less than a majority of the issued and outstanding shares of Viacom Class A common stock, and Viacom is restricted from issuing new voting shares until the record date for its stockholder approval. Because the Viacom proposals require the approval of a majority of the outstanding shares of Viacom Class A common stock and the NAI Parties will be the beneficial holders of a majority of the outstanding shares of Viacom Class A common stock as of the Viacom record date, the delivery of the NAI Viacom written consent and the NAI Viacom compensation proposal written consent will constitute receipt by Viacom of the stockholder approvals required for the Viacom proposals.

As of the Viacom record date, there were [●] shares of Viacom Class A common stock outstanding and entitled to consent with respect to the Viacom proposals, of which executive officers and directors of Viacom and their affiliates owned and were entitled to consent with respect to [●] shares of Viacom Class A common stock (excluding shares owned by the NAI Parties), representing approximately [●]% of the shares of Viacom Class A common stock outstanding on that date. 

You may consent to the Viacom proposals with respect to your shares of Viacom Class A common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to Viacom before the earlier of the delivery of the NAI Viacom written consent and the Viacom consent deadline. Your consent to the Viacom proposals may be changed or revoked at any time before the earlier of the delivery of the NAI Viacom written consent and the Viacom consent deadline. Under the Support



 

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Agreement, the NAI Parties have agreed to deliver the NAI Viacom written consent promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. Because the delivery of the NAI Viacom written consent will constitute receipt by Viacom of the Viacom stockholder approval, the delivery, change or revocation of a written consent by any other Viacom stockholder entitled to vote with respect to the Viacom proposals after the delivery of the NAI Viacom written consent will not have any effect. If you wish to change or revoke a previously given consent in accordance with the above, you may do so by mailing a notice of revocation or a new written consent with a later date to Viacom Inc., c/o Broadridge, P.O. Box 9111, Farmingdale, NY 11735-9543 or by submitting a new written consent with a later date online by visiting proxyvote.com and following the instructions described therein.

Governance Agreement (page 178)

Concurrently with the execution of the merger agreement, CBS, Viacom, the NAI Parties and certain other persons affiliated or associated with NAI entered into the Governance Agreement, which contains certain provisions that will become effective at the effective time. Pursuant to the terms of the Governance Agreement, unless the ViacomCBS board of directors determines otherwise with the Requisite Approval, ViacomCBS and the NAI Parties are required to take such actions as are necessary to ensure that (1) the post-merger directors (as defined in the section entitled “Summary—Governance Following Completion of the Merger”) constitute the only members of the ViacomCBS board of directors until the second anniversary of the closing and (2) in the event of any vacancy on the ViacomCBS board of directors prior to the second anniversary of the closing due to a director’s removal, death, retirement or resignation, or a vacancy existing by virtue of there being fewer than 13 members of the ViacomCBS board of directors at the effective time, (i) if such vacancy results from the departure of an NAI Affiliated Director, such vacancy will be filled by an individual designated by the NAI Parties, (ii) if such vacancy results from the departure of the chief executive officer of ViacomCBS, such vacancy will be filled by the new chief executive officer upon appointment by the ViacomCBS board of directors and (iii) any other vacancy will be filled by an Unaffiliated Independent Director approved with the Requisite Approval upon the recommendation of the Nominating and Governance Committee (acting by a majority vote) following customary public company practices. The NAI Parties have also agreed, until the second anniversary of the closing, to give good faith consideration to any business combination transaction or other strategic alternative involving ViacomCBS that the Unaffiliated Independent Directors determine may be in the best interests of ViacomCBS and its stockholders.

The Governance Agreement also provides, among other things, that the NAI Parties will not take actions that would result in (1) the ViacomCBS board of directors being comprised of less than a majority of directors who are Unaffiliated Independent Directors, (2) either of the Compensation Committee or Nominating and Governance Committee not being comprised entirely of Unaffiliated Independent Directors or (3) ViacomCBS availing itself of any “controlled company” exemption under the NASDAQ or NYSE listing standards, as applicable.

The Governance Agreement is described in more detail in the section of this joint consent solicitation statement/prospectus entitled “Governance Agreement.”

Amendment to Settlement Agreement (page 205)

Concurrently with the execution of the merger agreement, CBS, the NAI Parties and certain other parties listed therein entered into the Amendment to Settlement Agreement. The Amendment to Settlement Agreement, which will become effective from and after the effective time, provides for the deletion of certain provisions in the Settlement Agreement relating to the composition of the CBS board of directors, CBS’ independence and extraordinary transactions involving CBS, which matters will be governed by the Governance Agreement from and after the effective time. In the event that the merger agreement is terminated prior to the effective time for



 

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any reason, the Amendment to Settlement Agreement shall be deemed null and void. The Amendment to Settlement Agreement is described in more detail in the section of this joint consent solicitation statement/prospectus entitled “Amendment to Settlement Agreement.”

Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement (page 110)

At a meeting held on August 13, 2019, the CBS special committee unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) approved the merger agreement and the contemplated transactions, including the merger, and (3) recommended that the CBS board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger and the stock issuance.

At a meeting of the CBS board of directors held on August 13, 2019, following the meeting of the CBS special committee, the members of the CBS board of directors who were present at such meeting unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws and (3) recommended that the CBS stockholders entitled to vote adopt the merger agreement and approve the stock issuance. The members of the CBS board of directors who were present at the meeting were Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman and Frederick O. Terrell, each of whom is a member of the CBS special committee and is unaffiliated with NAI, and who collectively constitute more than two-thirds of the members of the CBS board of directors unaffiliated with NAI. The three members of the CBS board of directors who are not members of the CBS special committee, Shari E. Redstone, Robert N. Klieger and Strauss Zelnick, delivered waivers of notice prior to the meeting and were not present at the meeting. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The CBS board of directors recommends that CBS stockholders entitled to vote approve the CBS proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

For factors considered by the CBS special committee and the CBS board of directors in approving the merger agreement, see the section entitled The Merger—Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement.”

Recommendations of the Viacom Special Committee and the Viacom Board of Directors; Reasons for Viacom to Enter into the Merger Agreement (page 133)

At a meeting held on August 13, 2019, the Viacom special committee unanimously (1) determined that it is in the best interests of Viacom and its stockholders, and declared it advisable that Viacom enter into the merger agreement and consummate the contemplated transactions, including the merger, (2) recommended that the Viacom board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger, and (3) recommended that Viacom stockholders entitled to vote adopt the merger agreement.

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(each of whom is unaffiliated with NAI) unanimously (1) determined that entering into the merger agreement and consummating the contemplated transactions are in the best interests of Viacom and its stockholders, (2) approved and declared advisable the merger agreement and the consummation of the contemplated transactions, including the merger, and (3) recommended that Viacom stockholders entitled to vote adopt the merger agreement. The members of the Viacom board of directors who were present at the meeting were Robert M. Bakish, Thomas J. May, Judith A. McHale, Ronald L. Nelson, Charles E. Phillips, Jr., Nicole Seligman and Cristiana Falcone Sorrell. Two members of the Viacom board of directors, Shari E. Redstone and Deborah Norville, recused themselves from the meeting and were not in attendance. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The Viacom board of directors recommends that Viacom stockholders entitled to vote approve the Viacom proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

For factors considered by the Viacom special committee and the Viacom board of directors in approving the merger agreement, see the section entitled “The Merger—Recommendations of the Viacom Board of Directors; Reasons for Viacom to Enter into the Merger Agreement.”

Accounting Treatment (page 181)

NAI is the controlling stockholder of each of CBS and Viacom and therefore the merger is being accounted for as a transaction between entities under common control.

On August 13, 2019, NAI beneficially owned approximately 78.9% of the shares of CBS Class A common stock outstanding and approximately 79.8% of the shares of Viacom Class A common stock outstanding. Holders of CBS Class A common stock and Viacom Class A common stock are entitled to one vote per share with respect to all matters on which stockholders are entitled to vote. Holders of Class B common stock of each company do not have voting rights. Through the aforementioned voting interest, NAI is in a position to control the outcome of corporate actions of CBS and Viacom that require, or may be accomplished by, stockholder approval and therefore have the ability to control the direction of the business and affairs of CBS and Viacom. Additionally, as the controlling stockholder, NAI controls the outcome of the adoption of the merger agreement and the related approvals. Pursuant to the Support Agreement, the NAI Parties have agreed to execute and deliver (or cause to be executed and delivered) the NAI written consents promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. The delivery of the NAI written consents will constitute receipt of stockholder approval for each of CBS and Viacom with respect to the adoption of the merger agreement and related approvals. See also the sections entitled “Governance Agreement,” “Support Agreement,” “Amendment to Settlement Agreement” and “Risk Factors—Risks Relating to ViacomCBS After the Closing—NAI, through its voting control of ViacomCBS, will be in a position to control actions that require stockholder approval.”

Upon the closing, the net assets of Viacom will be combined with those of CBS at their historical carrying amounts and the companies will be presented on a combined basis for all historical periods that the companies were under common control. Shares of ViacomCBS common stock issued to Viacom stockholders in exchange for the outstanding shares of Viacom common stock will be recorded at par value and historical weighted average basic and diluted shares of Viacom will be adjusted by the exchange ratio. Intercompany transactions between Viacom and CBS will be eliminated from all historical periods. Additionally, the historical fiscal year end of CBS is December 31, while the historical fiscal year end of Viacom is September 30. As set forth in the merger agreement, the fiscal year end of ViacomCBS will be December 31. Accordingly, the historical results of Viacom will be recalendarized to conform to CBS’ presentation.



 

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Opinions of the CBS Special Committee’s Financial Advisors (page 120)

The CBS special committee retained Centerview and Lazard as its financial advisors in connection with the merger. In connection with this engagement, the CBS special committee requested that Centerview and Lazard evaluate the fairness, from a financial point of view, to the holders of the outstanding shares of CBS common stock (other than any shares of (1) CBS common stock held by NAI, NAI Entertainment or any other affiliate of CBS or Viacom and (2) CBS common stock held by CBS or any of its subsidiaries as treasury shares (which we collectively refer to in this section and in the summaries of Centerview’s and Lazard’s opinions under the section entitled “The Merger—Opinions of the CBS Special Committees Financial Advisors” as “Excluded Shares”) of the exchange ratio provided for pursuant to the merger agreement. On August 13, 2019, each of Centerview and Lazard rendered to the CBS special committee its oral opinion, which was subsequently confirmed by delivery of their respective written opinions dated August 13, 2019 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview and Lazard in preparing their respective opinions, the exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to the holders of the outstanding shares of CBS common stock (other than Excluded Shares).

The full text of the written opinion of each of Centerview and Lazard, each dated August 13, 2019, and each of which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing the applicable opinion, are included as Annex I and Annex J, respectively, and are incorporated herein by reference. Each of Centerview’s and Lazard’s financial advisory services and opinions were provided for the information and assistance of the CBS special committee (in the CBS special committee members’ capacities as such and not in any other capacities) in connection with and for purposes of its consideration of the merger and the opinions of Centerview and Lazard addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of the outstanding shares of CBS common stock (other than Excluded Shares) of the exchange ratio provided for pursuant to the merger agreement. The opinions of Centerview and Lazard did not address any other term or aspect of the merger agreement or the merger and do not constitute a recommendation to any CBS stockholder or any other person as to how such stockholder or other person should vote with respect to the merger or otherwise act with respect to the merger or any other matter.

The full text of the written opinions of each of Centerview and Lazard should be read carefully in their entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing the applicable opinion.

Opinions of the Viacom Special Committee’s Financial Advisors (page 143)

Opinion of LionTree (page 143)

LionTree Advisors LLC (which we refer to as “LionTree”) was retained by the Viacom special committee to act as a financial advisor in connection with the merger. On August 13, 2019, LionTree rendered its oral opinion to the Viacom special committee (which was subsequently confirmed in writing) that, as of such date, the merger consideration to be received by the holders of Viacom Class A common stock and Viacom Class B common stock, taken in the aggregate, pursuant to the merger agreement, was fair, from a financial point of view, to such holders (other than CBS, NAI and their respective affiliates, which we refer to as the “excluded parties”), based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion.

LionTree’s opinion was provided to the Viacom special committee and only addressed the fairness, from a financial point of view, of the merger consideration to be received by the holders of Viacom Class A common stock and Viacom Class B common stock, taken in the aggregate, pursuant to the merger



 

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agreement, to such holders (other than the excluded parties) (without giving effect to any impact of the merger on any particular stockholder of Viacom other than in its capacity as a holder of Viacom common stock). The summary of LionTree’s opinion in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex K to this joint consent solicitation statement/prospectus and incorporated herein by reference, and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion. However, neither LionTree’s opinion nor the summary of its opinion and the related analyses set forth in this joint consent solicitation statement/prospectus constitute a recommendation to any holder of Viacom common stock as to how such stockholder should vote or act on any matter relating to the merger or any other matter.

Opinion of Morgan Stanley (page 147)

Morgan Stanley & Co. LLC (which we refer to as “Morgan Stanley”) was retained by the Viacom special committee to act as a financial advisor in connection with the merger. On August 13, 2019, Morgan Stanley rendered its oral opinion to the Viacom special committee (which was subsequently confirmed in writing) that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of Viacom Class A common stock and Viacom Class B common stock, taken in the aggregate, pursuant to the merger agreement, was fair from a financial point of view to such holders (other than the excluded parties).

The full text of the written opinion, dated August 13, 2019, of Morgan Stanley, which describes, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken, is attached as Annex L to this document. The summary of Morgan Stanley’s opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of the opinion.

Morgan Stanley provided its opinion to the Viacom special committee (in its capacity as such) for the benefit and use of the Viacom special committee in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. Morgan Stanley’s opinion does not in any manner address the prices at which the CBS common stock or the Viacom common stock will trade following the consummation of the merger or at any time, as applicable. Morgan Stanley’s opinion does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed merger or any related matter.

Interests of Executive Officers and Directors in the Merger

Interests of CBS’ Executive Officers and Directors in the Merger (page 158)

The executive officers and directors of CBS have interests in the merger that are different from, or in addition to, the interests of CBS stockholders generally. The CBS special committee and the members of the CBS board of directors who recommended that CBS stockholders entitled to vote adopt the merger agreement and approve the merger were aware of, and considered, these interests to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in making the CBS board of directors’ recommendation that CBS stockholders entitled to vote adopt the merger agreement and approve the merger. Additional interests of the executive officers and directors of CBS in the merger include:

 

   

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the designation of (1) Joseph R. Ianniello, as the Chairman and Chief Executive Officer of the CBS business of ViacomCBS, (2) Christina Spade, as the Executive Vice President, Chief Financial Officer of ViacomCBS, and (3) Laura Franco, as the Executive Vice President, General Counsel of the CBS business of ViacomCBS, in each case, pursuant to the terms of a new employment agreement with CBS (see the section entitled “The Merger—Interests of CBS’ Executive Officers and Directors in the Merger”), and certain protections afforded to such persons pursuant to the A&R Charter, the A&R Bylaws and the Governance Agreement (see the section entitled “The Merger—Governance Following Completion of the Merger”);

 

   

that, at the closing, the ViacomCBS board of directors will consist of 13 directors, including six CBS designees;

 

   

the continued provision of indemnification for current and former executive officers and directors of CBS in accordance with the merger agreement;

 

   

that Ms. Redstone serves as the non-executive Vice Chair of each of the CBS board of directors and the Viacom board of directors;

 

   

that Ms. Redstone owns 20% of the voting and non-voting interests of NAI through a trust she controls and therefore she has a minority indirect beneficial interest in the CBS and Viacom shares owned by the NAI Parties, and that Ms. Redstone is a future trustee of, and has certain beneficial interests in, the SMR Trust, which owns 80% of the voting and non-voting interests in NAI;

 

   

that Mr. Klieger is a partner at Hueston Hennigan LLP, and that Hueston Hennigan LLP has provided legal advice to CBS, NAI, Mr. Redstone and Ms. Redstone from time to time; and

 

   

that Ms. Beinecke is a partner at Hughes Hubbard & Reed LLP, and that Hughes Hubbard & Reed LLP has provided legal advice to CBS and certain members of CBS management from time to time (including advising Mr. Ianniello and Mses. Spade and Franco in negotiations with CBS with respect to the new employment agreements entered into in connection with the merger and the other contemplated transactions and matters relating thereto).

CBS stockholders should take these and other potential interests into account in deciding whether to deliver a written consent “FOR” the CBS proposals. See the sections entitled “The Merger—Interests of CBS’ Executive Officers and Directors in the Merger” and “The Merger Agreement—Covenants of the Parties” for a more detailed description of these interests.

Interests of Viacom’s Executive Officers and Directors in the Merger (page 166)

The executive officers and directors of Viacom have interests in the merger that are different from, or in addition to, the interests of Viacom stockholders generally. The Viacom special committee and the members of the Viacom board of directors who recommended that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger were aware of, and considered, these interests to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in making the Viacom board of directors’ recommendation that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger. Additional interests of the executive officers and directors of Viacom in the merger include:

 

   

the treatment of Viacom stock options, Viacom RSU awards, Viacom PSU awards and notional units held in the Viacom Director DC Plan and the Viacom Employee DC Plans that are held by non-employee directors and/or executive officers, as applicable, in accordance with the merger agreement;

 

   

the payment of certain severance and other benefits to the executive officers of Viacom upon a qualifying termination of employment in connection with the merger;



 

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the designation of (1) Robert M. Bakish, the President and Chief Executive Officer of Viacom, as the President and Chief Executive Officer of ViacomCBS, (2) Christa A. D’Alimonte, the Executive Vice President, General Counsel and Secretary of Viacom, as Executive Vice President, General Counsel and Secretary of ViacomCBS, (3) Doretha (DeDe) Lea, the Executive Vice President, Global Government Affairs of Viacom, as Executive Vice President, Global Public Policy and Government Relations of ViacomCBS, and (4) Julia Phelps, the Executive Vice President, Communications, Culture and Marketing of Viacom, as Executive Vice President, Chief Communications and Corporate Marketing Officer of ViacomCBS, in each case, pursuant to the terms of an employment agreement with Viacom that will be assumed by ViacomCBS and will become effective upon the closing (see the section entitled “The Merger—Interests of Viacom’s Executive Officers and Directors in the Merger”), and certain protections afforded to Mr. Bakish and Ms. D’Alimonte pursuant to the A&R Charter, the A&R Bylaws and the Governance Agreement (see the section entitled “The Merger—Governance Following Completion of the Merger”);

 

   

the letter agreements with each of Mr. Bakish, Ms. D’Alimonte and Ms. Phelps providing for a supplemental grant of Viacom equity awards contingent upon the closing;

 

   

a transaction bonus and non-compete agreement with Wade C. Davis, the Executive Vice President and Chief Financial Officer of Viacom and payments thereunder;

 

   

that, at the closing, the ViacomCBS board of directors will consist of 13 directors, including four Viacom designees, as well as Mr. Bakish;

 

   

the continued provision of indemnification and insurance coverage for current and former executive officers and directors of Viacom in accordance with the merger agreement;

 

   

that Ms. Redstone serves as the non-executive Vice Chair of each of the CBS board of directors and the Viacom board of directors; and

 

   

that Ms. Redstone owns 20% of the voting and non-voting interests of NAI through a trust she controls and therefore she has a minority indirect beneficial interest in the CBS and Viacom shares owned by the NAI Parties, and that Ms. Redstone is a future trustee of, and has certain beneficial interests in, the SMR Trust, which owns 80% of the voting and non-voting interests in NAI.

Viacom stockholders should take these and other potential interests into account in deciding whether to deliver a written consent “FOR” the Viacom proposals. See the sections entitled “The Merger—Interests of Viacoms Executive Officers and Directors in the Merger” and “The Merger Agreement—Covenants of the Parties” for a more detailed description of these interests.

Governance Following Completion of the Merger (page 176)

Combined Company Name and Ticker Symbols

Following the effective time, the name of the combined company will be “ViacomCBS Inc.” and the Class A common stock and Class B common stock of the combined company will trade on NASDAQ under new ticker symbols “VIACA” and “VIAC,” respectively.

ViacomCBS Board of Directors

Under the merger agreement, CBS and Viacom have agreed to take all actions necessary to cause the ViacomCBS board of directors as of the effective time to consist of a total of 13 directors, comprised of:

 

   

six Initial CBS Directors, as follows: Candace K. Beinecke, Barbara M. Byrne, Brian Goldner, Linda M. Griego, Susan Schuman and Frederick O. Terrell;



 

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four Initial Viacom Directors, as follows: Judith A. McHale, Ronald L. Nelson, Charles E. Phillips, Jr. and Nicole Seligman;

 

   

two directors designated by NAI, one of whom will be Shari E. Redstone, who will serve as the non-executive Chair of the ViacomCBS board of directors, and one of whom will be Robert N. Klieger; and

 

   

the Chief Executive Officer of ViacomCBS as of the effective time, who will be Mr. Bakish.

If any of the foregoing Initial CBS Directors or Initial Viacom Directors, as of immediately prior to the effective time, (1) is not a director of CBS (in the case of an Initial CBS Director) or of Viacom (in the case of an Initial Viacom Director) who is unaffiliated with NAI, (2) fails to qualify as an “independent director” under the listing standards of NASDAQ and the applicable rules of the SEC or (3) declines to or is otherwise incapable of serving on the ViacomCBS board of directors for any reason, the CBS special committee (in the case of an Initial CBS Director) or the Viacom special committee (in the case of an Initial Viacom Director) will be entitled to select an alternative member of the ViacomCBS board of directors who is (i) both “independent” under NASDAQ and SEC rules and unaffiliated with NAI and, as of immediately prior to the effective time, serving on the CBS board of directors or the Viacom board of directors, as applicable, (ii) reasonably acceptable to the special committee of the other party and (iii) acceptable to NAI, and such director will become, upon appointment, an Initial CBS Director or an Initial Viacom Director, as applicable.

Following the effective time and generally during the first two years following the closing, the Governance Agreement will limit the ability of the NAI Parties to effect changes to the composition of the ViacomCBS board of directors. See the section entitled The Merger—Governance Following Completion of the Merger—Governance Agreement.”

Committees

Pursuant to the merger agreement, the standing committees of the ViacomCBS board of directors will consist of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. Under the merger agreement, each of CBS and Viacom have agreed to take all actions necessary such that, as of the effective time, (1) Ms. Byrne, an Initial CBS Director, will serve as the chair of the Audit Committee, (2) Mr. Goldner, an Initial CBS Director, will serve as the chair of the Compensation Committee and (3) Ms. Seligman, an Initial Viacom Director, will serve as the chair of the Nominating and Governance Committee, in each case, until his or her respective successor is fully elected or appointed and qualified or until his or her earlier death, resignation or removal in accordance with the governing documents of ViacomCBS and applicable law.

Management of ViacomCBS

The A&R Bylaws will provide that, among other things, for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, the executive officers of ViacomCBS will include (1) Mr. Bakish, the current President and Chief Executive Officer of Viacom, who will serve as President and Chief Executive Officer of ViacomCBS, (2) Ms. Spade, the current Executive Vice President, Chief Financial Officer of CBS, who will serve as Executive Vice President, Chief Financial Officer of ViacomCBS, and (3) Ms. D’Alimonte, the current Executive Vice President, General Counsel and Secretary of Viacom, who will serve as Executive Vice President, General Counsel and Secretary of ViacomCBS. In addition, pursuant to the A&R Bylaws, for a period of 15 months following the closing with respect to Mr. Ianniello and for a period of two years following the closing with respect to Ms. Franco, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, Mr. Ianniello, the current President and Acting Chief Executive



 

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Officer of CBS, will serve as Chairman and Chief Executive Officer of the CBS business of ViacomCBS and Ms. Franco, the current Executive Vice President, General Counsel of CBS, will serve as Executive Vice President and General Counsel of the CBS business of ViacomCBS.

Constituent Documents

As of the effective time, the CBS charter and the CBS bylaws will be amended and restated to read in their entirety as set forth on Annex G and Annex H to this joint consent solicitation statement/prospectus, respectively. Pursuant to the A&R Charter, the number of authorized shares of ViacomCBS Class A common stock will be decreased from 375 million to 55 million shares.

The A&R Charter and the A&R Bylaws will provide that, among other things, for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, (1) the number of directors constituting the entire ViacomCBS board of directors will be fixed at 13 members and (2) any vacancy on the ViacomCBS board of directors resulting from the departure of any Initial CBS Director or any Initial Viacom Director will be filled by a nominee approved by the Requisite Approval upon the recommendation of the Nominating and Governance Committee (acting by a majority vote) following customary public company practices. In addition, in order for the director filling such vacancy to constitute an Initial CBS Director or an Initial Viacom Director, a majority of the Initial CBS Directors then in office (or if there are no such Initial CBS Directors then in office, then at least 75% of the Unaffiliated Independent Directors) or a majority of the Initial Viacom Directors then in office (or if there are no such Initial Viacom Directors then in office, then at least 75% of the Unaffiliated Independent Directors), as applicable, must vote in favor of such person becoming an Initial CBS Director or an Initial Viacom Director, respectively. In the event of any vacancy on the ViacomCBS board of directors resulting from the departure of any NAI Affiliated Director, such vacancy may be filled by the ViacomCBS stockholders in accordance with the A&R Bylaws and A&R Charter.

As of the Effective Time, the A&R Bylaws will also provide that the approval of the ViacomCBS board of directors acting by the Requisite Approval will be required for the following:

 

   

the election, hiring or appointment of (1) any employee who serves in the capacity of (or who would, if appointed, serve in the capacity of) chief operating officer of ViacomCBS or any other position with substantially similar responsibilities, until the second anniversary of the closing, (2) any employee who served as chief executive officer, chief financial officer, chief operating officer or general counsel at CBS or Viacom at any time prior to the effective time (but excluding the Existing Specified Executives (as defined in the section entitled “CBS Proposal 4—Approval to Adopt Amendments to the Bylaws”), until the second anniversary of the closing, and (3) the Chairman and Chief Executive Officer of the CBS business, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

the termination or removal of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business), until the second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

any modification to any of the duties, authority or reporting relationships of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business) having a material effect, until the second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business having a material effect, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing; and

 

   

any modification to the compensation arrangements of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business) having a material effect, until the



 

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second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business having a material effect, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing.

In addition, consistent with the current Viacom charter and Viacom bylaws, the A&R Charter and the A&R Bylaws will prohibit ViacomCBS from entering into any agreement regarding, voting any shares or providing any consent in favor of, or consummating, any Paramount Transaction, without (1) the prior written consent of the holders of a majority of outstanding ViacomCBS Class A common stock and (2) the prior consent of at least 67% of the members of the ViacomCBS board of directors. “Paramount Transaction” means any of the following actions or events: to authorize, enter into, commit to or otherwise legally bind ViacomCBS and its subsidiaries taken as a whole to any transaction not in the ordinary course of business consistent with past practice (by joint venture, consortium, affiliation, agreement, guarantee, understanding or otherwise), for: (1) any sale, issuance, transfer, redemption, lien, encumbrance or other disposition (including, without limitation, by way of recapitalization, reclassification, dividend, distribution, merger, consolidation or otherwise) of (a) any shares of capital stock or ownership interest of Paramount or of any direct or indirect subsidiary of ViacomCBS involved with or supporting, in either case, in a material respect, ViacomCBS’ filmed entertainment business or any other business of Paramount (Paramount and each such subsidiary, a “Paramount Entity”), or (b) any options, warrants, convertible securities or other rights to purchase, acquire or encumber any shares of such capital stock or ownership interest of any Paramount Entity, in each case, to a party that is not ViacomCBS or any of ViacomCBS’ subsidiaries; or (2) any sale, transfer, license, lien, encumbrance or other disposition of any material asset of (a) any Paramount Entity or (b) the Paramount Entities taken as a whole, in each case, to a party that is not ViacomCBS or any of ViacomCBS’ subsidiaries.

Regulatory Approvals (page 179)

Under the merger agreement, it is a condition to each party’s obligation to effect the merger that certain U.S. federal or state regulatory requirements must be complied with or approvals must be obtained and certain non-U.S. regulatory clearances must be obtained. CBS and Viacom have determined that the merger is exempt from the premerger notification requirements of the HSR Act. As such, the merger is not subject to any filing requirements with U.S. federal competition authorities. The fact that a transaction is exempt from the requirements of the HSR Act does not preclude the U.S. Department of Justice or the U.S. Federal Trade Commission from investigating or seeking to enjoin the closing on the ground that it violates the United States antitrust laws.

CBS and Viacom can provide no assurance that regulators or other government agencies, including state attorneys general or private parties, will not initiate actions to challenge the merger before or after it is completed, and, if such an action or challenge is made, there can be no assurance as to its result. Private parties may also seek to take legal action under regulatory laws under some circumstances. Any such action or challenge to the merger could result in an administrative or court order enjoining the merger or in restrictions or conditions that would have a material adverse effect on ViacomCBS after the closing. In addition, even if all required regulatory and other governmental consents are obtained and the closing conditions are satisfied, no assurance can be given that any conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. The required regulatory and other governmental approvals are discussed under the section entitled “The Merger—Regulatory Approvals.”

No Solicitation (page 190)

Under the terms of the merger agreement, each of CBS and Viacom have agreed, until the earlier of the termination of the merger agreement and the effective time, not to, and to cause its subsidiaries not to, and to



 

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instruct (and use its reasonable best efforts to cause) its and its subsidiaries’ respective representatives not to, directly or indirectly:

 

   

solicit, initiate or knowingly facilitate or encourage (including by way of furnishing non-public information) the submission of any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined under the section entitled “The Merger Agreement—Covenants of the Parties—No Solicitation”);

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with, or for the purpose of, encouraging or facilitating an acquisition proposal; or

 

   

enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement constituting an acquisition proposal.

Notwithstanding these restrictions, if at any time prior to obtaining the applicable stockholder approval, CBS or Viacom receives an unsolicited acquisition proposal, and its board of directors or special committee determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes or is reasonably likely to lead to a superior proposal (as defined under the section entitled “The Merger Agreement—Covenants of the Parties—No Solicitation”), then such party may furnish information with respect to itself to, and participate in discussions or negotiations with, the person making such acquisition proposal.

CBS and Viacom have also each agreed to promptly notify the other party in the event that it receives an acquisition proposal and, subject to applicable law, to disclose to the other party the material terms and conditions of any such acquisition proposal and the identity of the person making such acquisition proposal and to keep the other party reasonably informed of any material developments with respect thereto.

Restrictions on Recommendation Withdrawal (page 191)

The merger agreement provides that, subject to the exceptions described below, none of the CBS board of directors, the CBS special committee, the Viacom board of directors or the Viacom special committee will (1) make an adverse recommendation change (as defined under the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination”) or (2) execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement constituting an acquisition proposal.

Notwithstanding the foregoing, prior to obtaining the relevant stockholder approval, each of the CBS board of directors, the CBS special committee, the Viacom board of directors or the Viacom special committee, as applicable, may make an adverse recommendation change or effect a superior proposal termination (as defined under the section entitled “The Merger Agreement—Termination”) if, upon receiving an acquisition proposal, such board or special committee determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes a superior proposal; provided, however, that no such action may be taken unless (1) the acting party has given the other party at least five business days’ prior written notice (which notice attaches all material information and documentation), (2) the acting party has negotiated in good faith with the other party during such notice period, to the extent the other party wishes to negotiate, to enable the other party to propose a binding offer to revise the terms of the merger agreement, (3) following the end of such notice period, the board of directors or special committee of the acting party has considered in good faith any such binding offer from the other party and has determined that the superior proposal would continue to constitute a superior proposal if the revisions proposed in such binding offer are given effect and (4) in the event of any material change to the material terms of such superior proposal, the acting party has delivered to the other party an additional notice and provided an additional notice period of at least three business days.



 

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In addition, prior to obtaining the relevant stockholder approval, each of the CBS board of directors, the CBS special committee, the Viacom board of directors or the Viacom special committee, as applicable, may make an adverse recommendation change in response to an intervening event (as defined under the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination”) if such board or special committee determines in good faith, after consultation with its outside legal counsel, that the failure to take such action in response to such intervening event would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law, subject to corresponding notice and match period requirements.

Conditions to Completion of the Merger (page 195)

The respective obligations of CBS and Viacom to effect the merger are subject to the satisfaction, or (to the extent permitted by law) waiver by CBS and Viacom (as applicable), at or prior to effective time of the following conditions:

 

   

Viacom Stockholder Approval. Viacom having obtained the affirmative vote of the holders of a majority of the outstanding shares of Viacom Class A common stock in favor of the adoption of the merger agreement.

 

   

CBS Stockholder Approval. CBS having obtained the affirmative vote of the holders of a majority of the outstanding shares of CBS Class A common stock in favor of the adoption of the merger agreement and the approval of the stock issuance.

 

   

Absence of Legal Restraint. No law having been adopted or promulgated, or being in effect, and no temporary, preliminary or permanent order issued by one or more specified governmental entities of competent jurisdiction being in effect, in each case, having the effect of making the merger illegal or otherwise prohibiting closing.

 

   

Regulatory Approvals. The approvals or consents of specified governmental entities having been received and being in full force and effect.

 

   

NASDAQ Listing. All issued and outstanding shares of CBS common stock as of immediately prior to the effective time and all shares of ViacomCBS common stock to be issued in the merger having been approved for listing on NASDAQ, subject to official notice of issuance.

 

   

Effectiveness of Registration Statement. The registration statement on Form S-4 of which this joint consent solicitation statement/prospectus forms a part having been declared effective by the SEC under the Securities Act, and no stop order suspending the effectiveness of such registration statement having been issued by the SEC and no proceedings for that purpose having been initiated or threatened by the SEC.

The obligation of CBS to effect the merger is subject to the satisfaction, or waiver by CBS, at or prior to the effective time of the following additional conditions:

 

   

Representations and Warranties. The representations and warranties of Viacom in the merger agreement being true and correct, in each case, both when made and at and as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), subject in most cases to “materiality” and “material adverse effect” qualifications.

 

   

Covenants. Viacom having performed in all material respects and complied in all material respects with all agreements and covenants required to be performed or complied with by it under the merger agreement at or prior to the effective time.

 

   

Officers Certificate. CBS having received a certificate of an executive officer of Viacom, dated as of the closing date, certifying that the conditions described under the two bullet points above (under “—Representations and Warranties” and “—Covenants”) have been satisfied.



 

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Resignations. Viacom having delivered to CBS the resignation (or other evidence of removal) of certain officers and directors from each office held by such person at Viacom and each of its subsidiaries, in each case, effective as of the effective time in form and substance reasonably acceptable to CBS.

 

   

Tax Opinion. CBS having received a written opinion from Paul, Weiss, Rifkind, Wharton & Garrison LLP (or, under certain circumstances, one of certain other law firms), dated as of the closing date and in form and substance reasonably satisfactory to CBS, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, for U.S. federal income tax purposes, the merger will qualify for its intended tax treatment, including that it will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

The obligation of Viacom to effect the merger is subject to the satisfaction, or waiver by Viacom, at or prior to the effective time of the following additional conditions:

 

   

Representations and Warranties. The representations and warranties of CBS in the merger agreement being true and correct, in each case, both when made and at and as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), subject in most cases to “materiality” and “material adverse effect” qualifications.

 

   

Covenants. CBS having performed in all material respects and complied in all material respects with all agreements and covenants required to be performed or complied with by it under the merger agreement at or prior to the effective time.

 

   

Officers Certificate. Viacom having received a certificate of an executive officer of CBS, dated as of the closing date, certifying that the conditions described under the two bullet points above (under “—Representations and Warranties” and “—Covenants”) have been satisfied.

 

   

Resignations. CBS having delivered to Viacom the resignation (or other evidence of removal) of certain officers and directors from each office held by such person at CBS and each of its subsidiaries, in each case, effective as of the effective time in form and substance reasonably acceptable to Viacom.

 

   

Tax Opinion. Viacom having received a written opinion from Cravath, Swaine & Moore LLP (or, under certain circumstances, one of certain other law firms), dated as of the closing date and in form and substance reasonably satisfactory to Viacom, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, for U.S. federal income tax purposes, the merger will qualify for its intended tax treatment, including that it will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Closing (page 195)

Unless the merger agreement is terminated, as described in the section entitled “The Merger Agreement—Termination,” the closing will occur on the second business day after the satisfaction or waiver (to the extent permitted by law) of the closing conditions described in the section entitled “The Merger AgreementConditions to Completion of the Merger” (other than those conditions that by their nature are to be satisfied at the closing but subject to the satisfaction or, to the extent permitted by law, waiver of such conditions), or at such other date as agreed to in writing by the parties to the merger agreement.

Termination of the Merger Agreement (page 197)

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CBS merger agreement proposal and the CBS stock issuance proposal or the Viacom stockholder approval with respect to the Viacom merger agreement proposal) by mutual written consent of CBS and Viacom or as follows:

 

   

By either CBS or Viacom:

 

   

if the effective time has not occurred on or before May 13, 2020 (provided that this right to terminate the merger agreement will not be available to any party whose material breach of any obligation under the merger agreement has been the primary cause of the failure of the effective time to occur on or before such date); or

 

   

if any legal restraint permanently restraining, enjoining or otherwise prohibiting or making illegal the merger or otherwise prohibiting the closing shall have become final and non-appealable (provided that this right to terminate the merger agreement will not be available to any party whose material breach of any obligation under the merger agreement has been the primary cause of the imposition of such legal restraint or the failure of such legal restraint to be resisted, resolved or lifted);

 

   

By CBS:

 

   

prior to receipt of the Viacom stockholder approval, if the Viacom board of directors or the Viacom special committee has made an adverse recommendation change, as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination”;

 

   

prior to receipt of the CBS stockholder approval, if (1) the CBS board of directors or the CBS special committee authorizes CBS, subject to complying with the merger agreement provisions described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination,” to enter into a definitive agreement providing for a superior proposal, (2) concurrently with the termination of the merger agreement, CBS, subject to complying with such merger agreement provisions, enters into a definitive agreement providing for a superior proposal and (3) prior to or concurrently with such termination, CBS pays to Viacom the CBS termination fee described in the section entitled “The Merger Agreement—Termination Fees; Expenses”; or

 

   

if Viacom has breached or failed to perform any representation, warranty, covenant or agreement contained in the merger agreement, or if any representation or warranty of Viacom shall have become untrue, in either case such that the applicable closing condition would not be satisfied, and (1) such breach is not reasonably capable of being cured prior to May 13, 2020 or (2) if such breach is reasonably capable of being cured prior to May 13, 2020, such breach has not been cured prior to the earlier of (i) 30 days following written notice of such breach from CBS to Viacom and (ii) May 13, 2020 (provided that this right to terminate the merger agreement will not be available to CBS if it is then in material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement or if any representation or warranty of CBS has become untrue, in either case so as to result in the failure of the applicable closing condition); or

 

   

By Viacom:

 

   

prior to receipt of the CBS stockholder approval, if the CBS board of directors or the CBS special committee has made an adverse recommendation change, as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination”;

 

   

prior to receipt of the Viacom stockholder approval, if (1) the Viacom board of directors or the Viacom special committee authorizes Viacom, subject to complying with the merger agreement provisions described in the section entitled “The Merger Agreement—Covenants of the Parties—



 

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Adverse Recommendation Change; Superior Proposal Termination,” to enter into a definitive agreement providing for a superior proposal, (2) concurrently with the termination of the merger agreement, Viacom, subject to complying with such merger agreement provisions, enters into a definitive agreement providing for a superior proposal and (3) prior to or concurrently with such termination, Viacom pays to CBS the Viacom termination fee described in the section entitled “The Merger Agreement—Termination Fees; Expenses”; or

 

   

if CBS has breached or failed to perform any representation, warranty, covenant or agreement contained in the merger agreement, or if any representation or warranty of CBS shall have become untrue, in either case such that the applicable closing condition would not be satisfied, and (1) such breach is not reasonably capable of being cured prior to May 13, 2020 or (2) if such breach is reasonably capable of being cured prior to May 13, 2020, such breach has not been cured prior to the earlier of (i) 30 days following written notice of such breach from Viacom to CBS and (ii) May 13, 2020 (provided that this right to terminate the merger agreement will not be available to Viacom if it is then in material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement or if any representation or warranty of Viacom has become untrue, in either case so as to result in the failure of the applicable closing condition).

Termination Fees; Expenses (page 199)

All fees and expenses incurred in connection with the merger will be the obligation of the party incurring such fees and expenses, except CBS and Viacom will each bear and pay one-half of the expenses incurred in connection with (1) the filing, printing and mailing of this joint consent solicitation statement/prospectus and (2) filing fees related to the merger and the merger agreement under applicable antitrust or competition laws.

In addition, if the merger agreement is terminated under certain circumstances, CBS will be required to pay Viacom a termination fee of $560,000,000. This termination fee will be payable:

 

   

(1) if Viacom terminates the merger agreement because the CBS board of directors or the CBS special committee makes an adverse recommendation change or (2) if CBS terminates the merger agreement in order to enter into a definitive agreement providing for a superior proposal, in each case, as described in the section entitled “The Merger Agreement—Termination”; or

 

   

if all of the following events occur:

 

   

(1) CBS or Viacom terminates the merger agreement because of a failure of the merger to occur by May 13, 2020 or (2) Viacom terminates the merger agreement because of a breach of a covenant by CBS, in each case, as described in the section entitled “The Merger Agreement—Termination”;

 

   

after the date of the merger agreement, an acquisition proposal with respect to CBS is publicly disclosed or announced or becomes publicly known:

 

   

prior to May 13, 2020 (in the case of a termination resulting from the failure of the merger to occur by May 13, 2020); or

 

   

prior to the termination of the merger agreement (in the case of a termination resulting from a breach of CBS’ covenants); and

 

   

(1) within 12 months following the termination of the merger agreement, CBS or any of its subsidiaries enters into a definitive agreement with respect to an acquisition proposal and such acquisition proposal is subsequently consummated (whether during or after such 12-month period) or (2) within 12 months following the termination of the merger agreement, any person commences a tender offer or exchange offer in respect of an acquisition proposal for CBS that is thereafter consummated (whether during or after such 12-month period).



 

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If the merger agreement is terminated under certain circumstances, Viacom will be required to pay CBS a termination fee of $373,000,000. This termination fee will be payable:

 

   

(1) if CBS terminates the merger agreement because the Viacom board of directors or the Viacom special committee makes an adverse recommendation change or (2) if Viacom terminates the merger agreement in order to enter into a definitive agreement providing for a superior proposal, in each case, as described in the section entitled “The Merger Agreement—Termination”; or

 

   

if all of the following events occur:

 

   

(1) CBS or Viacom terminates the merger agreement because of a failure of the merger to occur by May 13, 2020 or (2) CBS terminates the merger agreement because of a breach of a covenant by Viacom, in each case, as described in the section entitled “The Merger Agreement—Termination”;

 

   

after the date of the merger agreement, an acquisition proposal with respect to Viacom is publicly disclosed or announced or becomes publicly known:

 

   

prior to May 13, 2020 (in the case of a termination resulting from the failure of the merger to occur by May 13, 2020); or

 

   

prior to the termination of the merger agreement (in the case of a termination resulting from a breach of Viacom’s covenants); and

 

   

(1) within 12 months following the termination of the merger agreement, Viacom or any of its subsidiaries enters into a definitive agreement with respect to an acquisition proposal and such acquisition proposal is subsequently consummated (whether during or after such 12-month period) or (2) within 12 months following the termination of the merger agreement, any person commences a tender offer or exchange offer in respect of an acquisition proposal for Viacom that is thereafter consummated (whether during or after such 12-month period).

See the sections entitled “The Merger Agreement—Effect of Termination” and “The Merger Agreement—Termination Fees; Expenses.”

Material U.S. Federal Income Tax Consequences of the Merger (page 252)

The obligations of CBS and Viacom to complete the merger are conditioned upon the receipt by each of CBS and Viacom of an opinion of its respective outside counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Provided the merger qualifies as a “reorganization,” U.S. holders (as defined in the section entitled “Material U.S. Federal Income Tax Consequences”) of shares of Viacom common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the receipt of ViacomCBS common stock in exchange for Viacom common stock in the merger (other than gain or loss, if any, with respect to any cash received in lieu of a fractional share of ViacomCBS common stock).

The material U.S. federal income tax consequences of the merger are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences.” The discussion of the material U.S. federal income tax consequences contained in this joint consent solicitation statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state, or local tax laws or any U.S. federal tax laws other than U.S. federal income tax laws.



 

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All Viacom stockholders should consult their own tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of any U.S. federal, state, local, non-U.S. and other tax laws.

No Appraisal or Dissenters’ Rights (page 251)

Viacom stockholders and CBS stockholders are not entitled to appraisal rights under Delaware law in connection with the merger. See the section entitled “The Merger–No Appraisal or Dissenters’ Rights.”

Comparison of Stockholder Rights and Corporate Governance Matters (page 226)

Upon the closing, Viacom stockholders will become stockholders of ViacomCBS, and their rights will be governed by Delaware law and the governing corporate documents of ViacomCBS as amended and restated in connection with the closing, as set forth in the A&R Charter and A&R Bylaws which are included as Annex G and Annex H to this joint consent solicitation statement/prospectus, respectively. The differences between the governing corporate documents of CBS and Viacom that are currently in effect and the governing documents of ViacomCBS that will be in effect immediately following the closing are described in detail in the section entitled “Comparison of Stockholder Rights.”

Litigation Relating to the Merger (page 182)

On September 27, 2019, Bucks County Employees Retirement Fund (which we refer to as the “Bucks County Fund”), a purported holder of CBS Class B common stock, served CBS with a demand for inspection of books and records pursuant to 8 Del. C. § 220 (which we refer to as the “Demand”). While CBS has not conceded the Bucks County Fund’s entitlement to any documents, on October 10, 2019, CBS offered to produce certain categories of documents properly within the scope of a books and records demand under § 220. The Bucks County Fund rejected CBS’ offer and filed litigation in the Court of Chancery of the State of Delaware on October 15, 2019, seeking to compel production of all documents requested in the Demand.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CBS

The following selected historical consolidated financial data is derived from CBS’ consolidated financial statements as of and for each of the years ended December 31, 2018, 2017, 2016, 2015 and 2014 and consolidated financial statements as of and for the six months ended June 30, 2019 and 2018. In the opinion of CBS’ management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results for the interim periods.

The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of CBS and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition” contained in CBS’ Annual Report on Form 10-K for the fiscal year ended December 31, 2018, along with the unaudited consolidated financial statements of CBS contained in CBS’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 that CBS previously filed with the SEC and that are incorporated by reference into this joint consent solicitation statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. See the section entitled “Where You Can Find More Information.”

 

     For the Six Months
Ended June 30,
     For the Year Ended December 31,(2)  

(in millions, except per share amounts)

   2019(1)      2018      2018(3)(4)      2017(5)(6)(7)     2016(5)(6)     2015(5)(8)     2014(5)(9)  

Statement of Operations data:

                 

Revenues

   $ 7,976      $ 7,227      $ 14,514      $ 13,692     $ 13,166     $ 12,671     $ 12,519  

Operating income

   $ 1,923      $ 1,431      $ 2,768      $ 2,861     $ 2,902     $ 2,684     $ 2,631  

Net earnings from continuing operations

   $ 2,023      $ 911      $ 1,960      $ 1,309     $ 1,552     $ 1,554     $ 1,151  

Net earnings (loss) from discontinued operations, net of tax

   $ —        $ —        $ —        $ (952   $ (291   $ (141   $ 1,808  

Net earnings

   $ 2,023      $ 911      $ 1,960      $ 357     $ 1,261     $ 1,413     $ 2,959  

Basic net earnings (loss) per common share:

                 

Net earnings from continuing operations

   $ 5.41      $ 2.40      $ 5.20      $ 3.26     $ 3.50     $ 3.21     $ 2.09  

Net earnings (loss) from discontinued operations

   $ —        $ —        $ —        $ (2.37   $ (.66   $ (.29   $ 3.29  

Net earnings

   $ 5.41      $ 2.40      $ 5.20      $ .89     $ 2.84     $ 2.92     $ 5.38  

Diluted net earnings (loss) per common share:

                 

Net earnings from continuing operations

   $ 5.38      $ 2.38      $ 5.14      $ 3.22     $ 3.46     $ 3.18     $ 2.05  

Net earnings (loss) from discontinued operations

     —        $ —        $ —        $ (2.34   $ (.65   $ (.29   $ 3.22  

Net earnings

   $ 5.38      $ 2.38      $ 5.14      $ .88     $ 2.81     $ 2.89     $ 5.27  

Dividends per common share

   $ .36      $ .36      $ .72      $ .72     $ .66     $ .60     $ .54  


 

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     For the Six Months
Ended June 30,
     For the Year Ended December 31,(2)  

(in millions, except per share amounts)

   2019(1)      2018      2018(3)(4)      2017(5)(6)(7)      2016(5)(6)      2015(5)(8)      2014(5)(9)  

Balance Sheet data (at period end):

                    

Total assets:

                    

Continuing operations

   $ 23,822      $ 20,372      $ 21,847      $ 20,830      $ 19,642      $ 18,695      $ 18,372  

Discontinued operations

     13        13        12        13        4,596        5,070        5,563  

Total assets

   $ 23,835      $ 20,385      $ 21,859      $ 20,843      $ 24,238      $ 23,765      $ 23,935  

Total debt:

                    

Continuing operations

   $ 9,370      $ 9,850      $ 10,152      $ 10,162      $ 9,375      $ 8,448      $ 7,112  

Discontinued operations

     —          —          —          —          1,345        —          —    

Total debt

   $ 9,370      $ 9,850      $ 10,152      $ 10,162      $ 10,720      $ 8,448      $ 7,112  

Total Stockholders’ Equity

   $ 4,753      $ 2,167      $ 2,804      $ 1,978      $ 3,689      $ 5,563      $ 6,970  

 

(1)

During the six months ended June 30, 2019, CBS recorded a gain of $549 million ($386 million, net of tax), or $1.03 per diluted share, on the sale of its CBS Television City property and sound stage operation (which we refer to as “CBS Television City”) and a deferred tax benefit of $768 million, or $2.04 per diluted share, resulting from the transfer of intangible assets between subsidiaries of CBS in connection with a reorganization of CBS’ international operations.

(2)

On November 16, 2017, CBS completed the disposition of CBS Radio Inc. (which we refer to as “CBS Radio”) through a tax-free split-off. CBS Radio has been presented as a discontinued operation in CBS’ consolidated financial statements for all periods presented. Also included in discontinued operations is CBS Outdoor Americas Inc., which was disposed of in 2014, and Outdoor Europe, which was sold in 2013.

(3)

During 2018, CBS recorded expenses of $128 million primarily for professional fees related to legal proceedings and other corporate matters.

(4)

During 2018, CBS reversed a valuation allowance of $140 million relating to capital loss carryforwards that were utilized in connection with the sale of CBS Television City.

(5)

For 2017, net loss from discontinued operations, net of tax, includes a loss on the split-off of CBS Radio of $105 million, or $.26 per diluted share, and a market value adjustment of $980 million, or $2.41 per diluted share, recorded prior to the split-off to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom Communications Corp. Included in net loss from discontinued operations, net of tax, are noncash impairment charges of $444 million ($427 million, net of tax), or $.95 per diluted share, in 2016, and $484 million ($297 million, net of tax), or $.61 per diluted share, in 2015, in each case to reduce the carrying value of CBS Radio’s intangible assets. For 2014, net earnings from discontinued operations, net of tax, included a gain on the disposal of Outdoor Americas Inc. of $1.56 billion, or $2.78 per diluted share.

(6)

In 2017, CBS recorded a pension settlement charge of $352 million ($237 million, net of tax), or $.58 per diluted share, and in 2016, CBS recorded a pension settlement charge of $211 million ($130 million, net of tax), or $.29 per diluted share.

(7)

In 2017, CBS recorded a provisional charge of $129 million, or $.32 per diluted share, resulting from the enactment of federal tax legislation in December 2017.

(8)

In 2015, CBS recorded gains from the sales of internet businesses in China of $139 million ($131 million, net of tax), or $.27 per diluted share.

(9)

In 2014, in connection with the early redemption of $1.07 billion of its debt, CBS recorded a pretax loss on early extinguishment of debt of $352 million ($219 million, net of tax), or $.39 per diluted share.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF VIACOM

The following selected historical consolidated financial data is derived from Viacom’s consolidated financial statements as of, and for each of, the years ended September 30, 2018, 2017, 2016, 2015 and 2014 and condensed consolidated financial statements as of and for the nine months ended June 30, 2019 and 2018. In the opinion of Viacom’s management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results for the interim periods.

The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of Viacom and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Viacom’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, along with the unaudited condensed consolidated financial statements of Viacom contained in Viacom’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 that Viacom previously filed with the SEC and that are incorporated by reference into this joint consent solicitation statement/prospectus. The unaudited consolidated financial statements of Viacom have been prepared on the same basis as the audited financial statements of Viacom, except for the October 1, 2018 adoption of ASC Topic 606—Revenue from Contracts, ASU 2016-16—Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory, ASU 2016-01—Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2017-07—Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see the section entitled “Where You Can Find More Information.”

 

     As of and for the
Nine Months Ended
June 30,
     As of and for the Year Ended September 30,  

(in millions, except per share amounts)

   2019      2018      2018      2017      2016      2015      2014  

Statement of Earnings Data

                    

Revenues

   $ 9,405      $ 9,458      $ 12,943      $ 13,263      $ 12,488      $ 13,268      $ 13,783  

Operating income(1)

   $ 1,932      $ 1,926      $ 2,570      $ 2,489      $ 2,526      $ 3,112      $ 4,082  

Net earnings from continuing operations (Viacom and noncontrolling interests)

   $ 1,243      $ 1,329      $ 1,728      $ 1,919      $ 1,471      $ 2,002      $ 2,464  

Net earnings from continuing operations attributable to Viacom

   $ 1,219      $ 1,302      $ 1,688      $ 1,871      $ 1,436      $ 1,922      $ 2,392  

Net earnings from continuing operations per share attributable to Viacom:

                    

Basic

   $ 3.02      $ 3.23      $ 4.19      $ 4.68      $ 3.62      $ 4.78      $ 5.54  

Diluted

   $ 3.02      $ 3.23      $ 4.19      $ 4.67      $ 3.61      $ 4.73      $ 5.43  

Weighted average number of common shares outstanding:

                    

Basic

   $ 403.3      $ 402.6      $ 402.7      $ 399.9      $ 396.5      $ 402.2      $ 432.1  

Diluted

   $ 403.7      $ 402.9      $ 403.0      $ 400.6      $ 398.0      $ 406.0      $ 440.2  

Dividends declared per share of Class A and Class B common stock

   $ 0.60      $ 0.60      $ 0.80      $ 0.80      $ 1.40      $ 1.46      $ 1.26  


 

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     As of and for the
Nine Months Ended
June 30,
     As of and for the Year Ended September 30,  

(in millions, except per share amounts)

   2019      2018      2018      2017      2016      2015      2014  

Balance Sheet Data

                    

Total assets

   $ 23,648      $ 23,161      $ 23,783      $ 23,698      $ 22,508      $ 22,143      $ 22,985  

Total debt

   $ 8,958      $ 10,088      $ 10,082      $ 11,119      $ 11,913      $ 12,285      $ 12,699  

Total Viacom stockholders’ equity

   $ 8,440      $ 7,006      $ 7,407      $ 6,035      $ 4,277      $ 3,538      $ 3,719  

Total equity

   $ 8,483      $ 7,071      $ 7,465      $ 6,119      $ 4,330      $ 3,599      $ 3,747  

 

(1)

On October 1, 2018, Viacom retrospectively adopted ASU 2017-07—Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (which we refer to as “ASU 2017-07”). The historical audited consolidated financial statements that Viacom previously filed with the SEC, as well as this selected historical financial data, have not been adjusted for the effect of the adoption because it was immaterial. The adoption of ASU 2017-07 would have resulted in reclassification of $2 million, $3 million, $2 million, $29 million and ($2) million from Selling, general and administrative to Other items, net in the Consolidated Statements of Earnings for the years ended September 30, 2018, 2017, 2016, 2015, and 2014, respectively.



 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following selected unaudited pro forma condensed combined financial data gives effect to the merger. The unaudited pro forma condensed combined statements of operations data is presented as if the merger had occurred on January 1, 2016. The unaudited pro forma condensed combined balance sheet data at June 30, 2019 is presented as if the merger had occurred on June 30, 2019. The selected unaudited pro forma condensed combined financial data is derived from, and should be read in conjunction with, the section entitled “ViacomCBS Inc. Unaudited Pro Forma Condensed Combined Financial Statements” and accompanying notes elsewhere in this joint consent solicitation statement/prospectus. The selected unaudited pro forma condensed combined financial data has been derived from CBS’ and Viacom’s respective historical consolidated financial statements. The historical fiscal year end of CBS is December 31. The historical fiscal year end of Viacom is September 30. As set forth in the merger agreement, the fiscal year end of ViacomCBS will be December 31. Accordingly, in order to present the pro forma results of ViacomCBS on a December 31 fiscal year-end basis, the historical results of Viacom were recalendarized to conform to CBS’ presentation.

The selected unaudited pro forma condensed combined financial data is presented for illustrative purposes only and does not necessarily reflect the operating results or financial position that would have occurred if the merger had been consummated on the dates indicated, nor is it necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. In addition, the data does not give effect to revenue synergies, operating efficiencies or cost savings that may be achieved with respect to the combined company. Actual results may differ materially from the assumptions within the accompanying selected unaudited pro forma condensed combined financial data.

ViacomCBS Selected Unaudited Pro Forma Condensed Combined Statements of Operations Data

(in millions, except per share amounts)

 

     Six Months Ended
June 30, 2019
     Year Ended December 31,  
   2018      2017      2016  

Revenues

   $ 14,243      $ 27,356      $ 26,556      $ 25,685  

Operating income

   $ 3,253      $ 5,224      $ 5,364      $ 5,298  

Net earnings from continuing operations attributable to ViacomCBS

   $ 2,924      $ 3,431      $ 3,319      $ 2,935  

Net earnings from continuing operations per common share attributable to ViacomCBS:

           

Basic

   $ 4.76      $ 5.56      $ 5.19      $ 4.31  

Diluted

   $ 4.74      $ 5.52      $ 5.13      $ 4.28  

Weighted average number of common shares outstanding:

           

Basic

     614        617        640        681  

Diluted

     617        621        647        685  


 

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ViacomCBS Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data

(in millions)

 

     At
June 30, 2019
 

Cash and cash equivalents

   $ 938  

Total assets

   $ 48,373  

Long-term debt, including finance leases (current and non-current)

   $ 18,328  

Total ViacomCBS stockholders’ equity

   $ 12,922  

Total Stockholders’ equity

   $ 12,965  


 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL DATA

The following table sets forth selected historical per share data of CBS and Viacom and unaudited pro forma per share financial data after giving effect to the merger. The CBS historical data has been derived from and should be read together with: (1) CBS’ unaudited consolidated financial statements and related notes contained in CBS’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2019; and (2) CBS’ audited consolidated financial statements and accompanying notes contained in CBS’ Annual Report on Form 10-K for the year ended December 31, 2018, which are each incorporated by reference into this joint consent solicitation statement/prospectus. The Viacom historical data has been derived from, and should be read together with, (1) Viacom’s unaudited consolidated financial statements and accompanying notes contained in Viacom’s Quarterly Reports on Form 10-Q for the following periods: (i) the quarter ended June 30, 2019; (ii) the quarter ended December 31, 2018; and (iii) the quarter ended December 31, 2017, and (2) Viacom’s audited consolidated financial statements and accompanying notes contained in Viacom’s Annual Report on Form 10-K for the year ended September 30, 2018, which are each incorporated by reference into this joint consent solicitation statement/prospectus. The unaudited pro forma per share financial data has been derived from, and should be read in conjunction with, the section entitled “ViacomCBS Inc. Unaudited Pro Forma Condensed Combined Financial Statements” and accompanying notes included in this joint consent solicitation statement/prospectus. The unaudited pro forma per share financial data is presented as if the merger had been completed on January 1, 2016, for basic and diluted net earnings per share data, and June 30, 2019 for book value per share data. The historical fiscal year end of CBS is December 31. The historical fiscal year end of Viacom is September 30. As set forth in the merger agreement, the fiscal year end of ViacomCBS will be December 31. Accordingly, in order to present the Viacom historical per share data and the pro forma per share data of ViacomCBS on a December 31 fiscal year-end basis, the historical results of Viacom were recalendarized to conform to CBS’ presentation.

The unaudited pro forma per share financial data is provided for illustrative purposes only and does not necessarily reflect the operating results or financial position that would have occurred if the merger had been consummated on the dates indicated, nor is it necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. In addition, the data does not give effect to revenue synergies, operating efficiencies or cost savings that may be achieved with respect to the combined company. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma per share financial data.

 

     Six Months Ended
or At

June 30, 2019
     Year Ended December 31,  
     2018      2017      2016  

Historical CBS Per Share Data

           

Net earnings from continuing operations per common share:

           

Basic

   $ 5.41      $ 5.20      $ 3.26      $ 3.50  

Diluted

   $ 5.38      $ 5.14      $ 3.22      $ 3.46  

Book value per share of common stock

   $ 12.67           

Cash dividends declared

   $ 0.36      $ 0.72      $ 0.72      $ 0.66  


 

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     Six Months Ended
or At

June 30, 2019
     Year Ended December 31,  
     2018      2017      2016  

Historical Viacom Per Share Data

           

Net earnings from continuing operations per share attributable to Viacom:

           

Basic

   $ 2.24      $ 3.65      $ 5.01      $ 3.48  

Diluted

   $ 2.23      $ 3.65      $ 5.00      $ 3.47  

Book value per share of common stock

   $ 20.94           

Cash dividends declared

   $ 0.40      $ 0.80      $ 0.80      $ 1.20  

 

     Six Months Ended
or At

June 30, 2019
     Year Ended December 31,  
     2018      2017      2016  

Unaudited Pro forma ViacomCBS Per Share Data

           

Net earnings from continuing operations per share attributable to ViacomCBS:

           

Basic

   $ 4.76      $ 5.56      $ 5.19      $ 4.31  

Diluted

   $ 4.74      $ 5.52      $ 5.13      $ 4.28  

Book value per share of common stock

   $ 20.98           

Cash dividends declared(1)

     N/A        N/A        N/A        N/A  

 

     Six Months Ended
or At

June 30, 2019
     Year Ended December 31,  
     2018      2017      2016  

Viacom Equivalent Pro Forma Per Share Data(2)

           

Net earnings from continuing operations per share attributable to Viacom:

           

Basic

   $ 2.84      $ 3.32      $ 3.09      $ 2.57  

Diluted

   $ 2.83      $ 3.29      $ 3.06      $ 2.55  

Book value per share of common stock

   $ 12.51           

Cash dividends declared(1)

     N/A        N/A        N/A        N/A  

 

(1)

Pro forma ViacomCBS and Viacom Equivalent Pro Forma dividends per share data are not provided due to the fact that the dividend policy for ViacomCBS will be determined by the ViacomCBS board of directors following the closing.

(2)

The Viacom equivalent pro forma data was calculated by multiplying the ViacomCBS unaudited pro forma data by the exchange ratio of 0.59625.



 

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COMPARATIVE PER SHARE MARKET PRICE INFORMATION

The table below sets forth, for the calendar quarters indicated, the intra-day high and low sales prices per share, as well as the dividend paid per share, of CBS Class A common stock, which trades on the NYSE under the symbol “CBS.A,” and Viacom Class A common stock, which trades on NASDAQ under the symbol “VIA.”

 

     CBS Class A      Viacom Class A  

Calendar Period

   High      Low      Cash
Dividends
Declared
     High      Low      Cash
Dividends
Declared
 

2017

                 

First quarter

   $ 70.68      $ 62.25      $ 0.18      $ 48.80      $ 38.60      $ 0.20  

Second quarter

   $ 71.07      $ 61.01      $ 0.18      $ 49.00      $ 36.25      $ 0.20  

Third quarter

   $ 68.86      $ 57.45      $ 0.18      $ 42.55      $ 36.35      $ 0.20  

Fourth quarter

   $ 61.70      $ 53.00      $ 0.18      $ 37.75      $ 28.20      $ 0.20  

2018

                 

First quarter

   $ 61.25      $ 49.33      $ 0.18      $ 40.64      $ 32.30      $ 0.20  

Second quarter

   $ 58.78      $ 47.98      $ 0.18      $ 40.20      $ 31.05      $ 0.20  

Third quarter

   $ 59.76      $ 51.35      $ 0.18      $ 37.55      $ 32.00      $ 0.20  

Fourth quarter

   $ 59.01      $ 41.48      $ 0.18      $ 38.00      $ 27.01      $ 0.20  

2019

                 

First quarter

   $ 52.29      $ 43.60      $ 0.18      $ 35.41      $ 27.60      $ 0.20  

Second quarter

   $ 52.86      $ 46.63      $ 0.18      $ 37.54      $ 32.39      $ 0.20  

Third quarter

   $ 53.68      $ 42.31      $ 0.18      $ 36.68      $ 25.88      $ 0.20  

Fourth quarter (through October 15, 2019)

   $ 43.90      $ 40.71        —        $ 26.86      $ 24.54        —    

The table below sets forth, for the calendar quarters indicated, the intra-day high and low sales prices per share, as well as the dividend paid per share, of CBS Class B common stock, which trades on the NYSE under the symbol “CBS,” and Viacom Class B common stock, which trades on NASDAQ under the symbol “VIAB.”

 

     CBS Class B      Viacom Class B  

Calendar Period

   High      Low      Cash
Dividends
Declared
     High      Low      Cash
Dividends
Declared
 

2017

                 

First quarter

   $ 69.60      $ 61.95      $ 0.18      $ 46.72      $ 35.50      $ 0.20  

Second quarter

   $ 70.10      $ 59.72      $ 0.18      $ 46.70      $ 33.30      $ 0.20  

Third quarter

   $ 68.75      $ 56.91      $ 0.18      $ 36.77      $ 26.65      $ 0.20  

Fourth quarter

   $ 60.77      $ 52.75      $ 0.18      $ 32.56      $ 22.13      $ 0.20  

2018

                 

First quarter

   $ 61.59      $ 49.24      $ 0.18      $ 35.55      $ 27.76      $ 0.20  

Second quarter

   $ 58.50      $ 47.54      $ 0.18      $ 32.15      $ 26.56      $ 0.20  

Third quarter

   $ 59.59      $ 50.91      $ 0.18      $ 34.44      $ 27.24      $ 0.20  

Fourth quarter

   $ 59.56      $ 41.38      $ 0.18      $ 33.92      $ 23.31      $ 0.20  

2019

                 

First quarter

   $ 51.94      $ 43.34      $ 0.18      $ 30.89      $ 24.85      $ 0.20  

Second quarter

   $ 52.89      $ 46.43      $ 0.18      $ 31.18      $ 27.52      $ 0.20  

Third quarter

   $ 53.71      $ 40.08      $ 0.18      $ 31.96      $ 23.93      $ 0.20  

Fourth quarter (through October 15, 2019)

   $ 41.08      $ 37.10        —        $ 24.48      $ 22.14        —    

The CBS board of directors has the power to determine the amount and frequency of the payment of dividends to CBS stockholders. Decisions regarding whether to pay dividends and the amount of any dividends



 

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are based on compliance with the DGCL, compliance with agreements governing CBS’ indebtedness, earnings, cash requirements, results of operations, cash flows and financial condition and other factors that the CBS board of directors considers important. While CBS anticipates that if the merger is not completed it would continue to pay dividends, there are no assurances that this will be the case. Under the merger agreement, until the effective time, CBS may continue to pay regular, quarterly cash dividends in an amount per share of up to $0.18 per quarter.

The Viacom board of directors has the power to determine the amount and frequency of the payment of dividends to Viacom stockholders. Decisions regarding whether to pay dividends and the amount of any dividends are based on compliance with the DGCL, compliance with agreements governing Viacom’s indebtedness, earnings, cash requirements, results of operations, cash flows and financial condition and other factors that the Viacom board of directors considers important. While Viacom anticipates that if the merger is not completed it would continue to pay dividends, there are no assurances that this will be the case. Under the merger agreement, until the effective time, Viacom may continue to pay regular, quarterly cash dividends in an amount per share of up to $0.20 per quarter.

The following tables present the closing prices of CBS common stock and Viacom common stock on August 12, 2019, the last trading day prior to the date of the public announcement of the signing of the merger agreement, and October 15, 2019, the last trading day prior to the date of this joint consent solicitation statement/prospectus. The tables also show the implied per share value of the merger consideration for each share of Viacom common stock on the relevant date.

With respect to CBS Class A common stock and Viacom Class A common stock:

 

Date

  

CBS.A
Closing
Price

  

VIA
Closing
Price

   Exchange
Ratio
    

Implied
Per Share Value of Merger Consideration

August 12, 2019

   $48.88    $32.56      0.59625      $29.14

October 15, 2019

   $41.76    $25.29      0.59625      $24.90

With respect to CBS Class B common stock and Viacom Class B common stock:

 

Date

  

CBS
Closing
Price

  

VIAB
Closing
Price

   Exchange
Ratio
    

Implied
Per Share Value of Merger Consideration

August 12, 2019

   $48.04    $28.53      0.59625      $28.64

October 15, 2019

   $38.07    $22.76      0.59625      $22.70

The above tables show only historical comparisons. Because CBS’ share price will fluctuate between now and the closing, and because the exchange ratio is fixed and will not be adjusted to reflect changes in CBS’ or Viacom’s respective share prices, the value of the ViacomCBS common stock received by Viacom stockholders in the merger may differ from the implied value based on the share price on the date of the merger agreement or on October 15, 2019. We urge you to obtain current share price quotations for CBS common stock and Viacom common stock and to review carefully the other information contained in this joint consent solicitation statement/prospectus or incorporated by reference into this joint consent solicitation statement/prospectus in considering whether to approve the CBS proposals and the Viacom proposals, as applicable. No assurance can be given concerning the market prices of CBS common stock and Viacom common stock before or after the effective time.



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint consent solicitation statement/prospectus contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act, and Section 21E of the Exchange Act. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “target,” similar expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed merger and the anticipated benefits thereof. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements, including the failure to consummate the proposed merger or to make any filing or take other action required to consummate such transaction in a timely matter or at all. Important risk factors that may cause such a difference include, but are not limited to (1) the proposed merger may not be completed on anticipated terms and timing, (2) a condition to the closing may not be satisfied, including obtaining regulatory approvals, (3) the anticipated tax treatment of the merger may not be obtained, (4) the potential impact of unforeseen liabilities, future capital expenditures, revenues, costs, expenses, earnings, synergies, economic performance, indebtedness, financial condition and losses on the future prospects, business and management strategies for the management, expansion and growth of the combined business after the closing, (5) potential litigation relating to the proposed merger that could be instituted against CBS, Viacom or their respective directors, (6) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, (7) any negative effects of the announcement, pendency or the consummation of the merger on the market price of CBS’ or Viacom’s common stock and on CBS’ or Viacom’s operating results, (8) risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the proposed merger, (9) the risks and costs associated with the integration of, and the ability of CBS and Viacom to integrate, the businesses successfully and to achieve anticipated synergies, (10) the risk that disruptions from the proposed merger will harm CBS’ or Viacom’s business, including current plans and operations, (11) the ability of CBS or Viacom to retain and hire key personnel and uncertainties arising from leadership changes, (12) legislative, regulatory and economic developments, (13) the other risks described in CBS’ and Viacom’s most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and (14) management’s response to any of the aforementioned factors.

These risks, as well as other risks associated with the proposed merger, are more fully discussed in the section of this joint consent solicitation statement/prospectus entitled “Risk Factors.” While the lists of factors presented here and in the section entitled “Risk Factors” are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on CBS’ or Viacom’s consolidated financial condition, results of operations, credit rating or liquidity. Neither CBS nor Viacom assumes any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.



 

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RISK FACTORS

Risk Factors Relating to the Merger

Because the market price of CBS common stock will fluctuate, Viacom stockholders cannot be sure of the value of ViacomCBS common stock they will receive in the merger. In addition, because the exchange ratio is fixed, the number of shares of ViacomCBS common stock to be received by Viacom stockholders in the merger will not change between now and the time the merger is completed to reflect changes in the trading prices of CBS common stock or Viacom common stock.

As a result of the merger, each share of Viacom Class A common stock and each share of Viacom Class B common stock issued and outstanding immediately prior to the effective time (other than shares held directly by Viacom as treasury shares or by CBS) will be converted automatically into 0.59625 shares of ViacomCBS Class A common stock and 0.59625 shares of ViacomCBS Class B common stock, respectively. The exchange ratio is fixed and will not be adjusted prior to the closing to account for changes in the trading prices of CBS common stock or Viacom common stock or, except as otherwise set forth in the merger agreement, other factors. The exact value of the consideration to Viacom stockholders will therefore depend on the price per share of CBS common stock at the closing, which may be greater than, less than or the same as the price per share of CBS common stock at the time of entry into the merger agreement or the date of this joint consent solicitation statement/prospectus.

As of October 15, 2019, the last trading day prior to the date of this joint consent solicitation statement/prospectus, the implied value of the exchange ratio to Viacom stockholders is approximately $24.90 per share of Viacom Class A common stock and $22.70 per share of Viacom Class B common stock. The market price of CBS common stock is subject to general price fluctuations in the market for publicly traded equity securities and has experienced volatility in the past. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the business, operations and prospects of CBS or Viacom and regulatory considerations, many of which are factors beyond CBS’ and Viacom’s control. You should obtain current market price quotations for CBS common stock; however, as noted above, the prices at the effective time may be greater than, the same as or less than such price quotations.

CBS and Viacom will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees, commercial partners, clients and customers may have an adverse effect on CBS or Viacom. These uncertainties may impair CBS’ or Viacom’s ability to retain and motivate key personnel and could cause customers and others that deal with CBS or Viacom, as applicable, to defer or decline entering into contracts with CBS or Viacom, as applicable, or making other decisions concerning CBS or Viacom, as applicable, or seek to change existing business relationships with CBS or Viacom, as applicable. Certain of CBS’ and/or Viacom’s contracts contain change of control restrictions that may give rise to a right of termination or cancellation in connection with the merger. In addition, if key employees depart because of uncertainty about their future roles and the potential complexities of the merger, CBS’ and Viacom’s businesses could be harmed. Furthermore, the merger agreement contains restrictions on the ability of CBS and Viacom to take certain actions outside the ordinary course of business prior to the closing, which may delay or prevent CBS and Viacom from undertaking certain actions or business opportunities that may arise prior to the closing. See the section entitled “The Merger Agreement—Covenants of the Parties—Conduct of Business Pending the Closing Date” for a description of the restrictive covenants applicable to CBS and Viacom.

The merger agreement limits CBS’ and Viacom’s ability to pursue alternatives to the merger.

The merger agreement contains provisions that make it more difficult for CBS or Viacom to enter into alternative transactions. The merger agreement contains certain provisions that restrict CBS’ and Viacom’s

 

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ability to, among other things, solicit, initiate or knowingly facilitate or encourage the submission of inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined in the section entitled “The Merger Agreement—Covenants of the Parties—No Solicitation”) from a third party. The merger agreement also provides that each of the CBS board of directors, the CBS special committee, the Viacom board of directors and the Viacom special committee may not make an adverse recommendation change (as defined in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination”) except under the circumstances described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination.”

In addition, CBS or Viacom may be required to pay a termination fee of $560,000,000 or $373,000,000, respectively, to the other party if the merger is not consummated under specified circumstances. See the section entitled “The Merger Agreement—Termination Fees; Expenses” for a description of the circumstances under which such a termination fee is payable. In addition, upon the receipt of the CBS stockholder approval or the Viacom stockholder approval, the right of such party to terminate the merger agreement in response to a superior proposal will be eliminated. While CBS and Viacom believe these provisions are reasonable, customary and not preclusive of other offers, the provisions might discourage a third party that has an interest in acquiring all or a significant part of CBS or Viacom from considering or proposing such acquisition, even if such party were prepared to pay consideration with a higher per-share value than the currently proposed merger consideration, in the case of Viacom, or if such party were prepared to enter into an agreement that may be more favorable to CBS and/or its stockholders, in the case of CBS. Furthermore, the requirement to pay a termination fee under certain circumstances may result in a third party proposing to pay a lower per-share price to acquire CBS or Viacom, as applicable, than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable by either CBS or Viacom in certain circumstances.

The merger is subject to a number of closing conditions and, if these conditions are not satisfied, the merger agreement may be terminated in accordance with its terms and the merger may not be completed. In addition, the parties have the right to terminate the merger agreement under other specified circumstances, in which case the merger would not be completed.

The merger is subject to a number of closing conditions and, if these conditions are not satisfied or waived (to the extent permitted by law), the merger will not be completed. These conditions include, among others: (1) receipt of the Viacom stockholder approval adopting the merger agreement and approving the merger (see the section entitled “Viacom Proposal 1—Adoption of the Merger Agreement”); (2) receipt of the CBS stockholder approval adopting the merger agreement and approving the merger (see the section entitled “CBS Proposal 1—Adoption of the Merger Agreement”) and the stock issuance (see the section entitled “CBS Proposal 2—Approval of the Stock Issuance”); (3) the absence of certain legal restraints prohibiting closing; (4) the receipt of certain governmental approvals and consents; (5) the approval for listing on NASDAQ of all shares of CBS common stock that are issued and outstanding as of immediately prior to the effective time and of all shares of ViacomCBS common stock to be issued in the merger, subject to official notice of issuance; and (6) the effectiveness of the registration statement of which this joint consent solicitation statement/prospectus forms a part. In addition, each of CBS’ and Viacom’s obligation to complete the merger is subject to, among other things, the accuracy of the other party’s representations and warranties in the merger agreement (subject in most cases to “materiality” and “material adverse effect” qualifications), and the other party’s compliance with its covenants and agreements in the merger agreement in all material respects. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” for further information regarding closing conditions to the merger.

These conditions to the closing may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by May 13, 2020, CBS or Viacom may choose not to proceed with the merger. Moreover, the parties can mutually decide to terminate the merger agreement at any time prior to the closing. In addition, each of CBS and Viacom may elect to terminate the merger agreement in certain other

 

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circumstances, as described in the section entitled “The Merger Agreement—Termination.” If the merger agreement is terminated, CBS and Viacom may incur substantial fees in connection with termination of the merger agreement and neither of them will realize the anticipated benefits of the merger. For a description of the circumstances under which a termination fee is payable, see the section entitled “The Merger Agreement—Termination Fees; Expenses.”

Failure to complete the merger could negatively impact the business, financial results and stock prices of CBS and/or Viacom.

If the merger is not completed, the ongoing businesses of CBS and Viacom may be adversely affected and CBS and Viacom will be subject to several risks and consequences, including the following:

 

   

CBS may be required, under certain circumstances, to pay Viacom a termination fee of $560,000,000;

 

   

Viacom may be required, under certain circumstances, to pay CBS a termination fee of $373,000,000;

 

   

CBS and/or Viacom will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as significant fees and expenses relating to financial advisory, legal, accounting, consulting and other advisory fees and expenses, employee-benefit and related expenses, regulatory filings and filing and printing fees; and

 

   

matters relating to the merger may require substantial commitments of time and resources by CBS management and Viacom management and the expenditure of significant funds in the form of fees and expenses, which could otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to CBS and Viacom as separate companies, as the case may be.

In addition, if the merger is not completed, CBS and/or Viacom may experience negative reactions from the financial markets and from their respective employees, commercial partners, clients and customers. CBS and Viacom could also be subject to litigation, including litigation related to failure to complete the merger or to enforce their respective obligations under the merger agreement. If the merger is not consummated, there can be no assurance that the risks described above will not materially affect the business, financial results and stock prices of CBS and/or Viacom.

For a description of the circumstances under which a termination fee is payable, see the section entitled “The Merger Agreement—Termination Fees; Expenses.”

Litigation relating to the contemplated transactions may be filed against the CBS board of directors, the CBS special committee, the Viacom board of directors and/or the Viacom special committee that could prevent or delay the closing and/or result in the payment of damages following the closing.

In connection with the contemplated transactions, it is possible that CBS stockholders and/or Viacom stockholders may file putative class action lawsuits against the CBS board of directors, the CBS special committee, the Viacom board of directors and/or the Viacom special committee. Among other remedies, these stockholders could seek damages and/or to enjoin the merger. The outcome of any litigation is uncertain and any such potential lawsuits could prevent or delay the closing and/or result in substantial costs to CBS and/or Viacom. Any such actions may create uncertainty relating to the merger and may be costly and distracting to management. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect ViacomCBS’ business, financial condition, results of operations and cash flows.

CBS or Viacom may waive one or more of the closing conditions without re-soliciting stockholder approval.

Each of CBS and Viacom has the right to waive certain of the conditions to its obligation to complete the merger. Any such waiver may not require re-solicitation of stockholders, in which case stockholders will not

 

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have the chance to change their votes as a result of any such waiver and CBS and Viacom will have the ability to complete the merger without seeking further stockholder approval. Any determination whether to waive any condition to the merger, whether stockholder approval would be re-solicited as a result of any such waiver or whether this joint consent solicitation statement/prospectus would be amended as a result of any waiver will be made by CBS or Viacom, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time, and any such waiver could have an adverse effect on ViacomCBS.

CBS and Viacom executive officers and directors have interests in the merger that are different from, or in addition to, the interests of CBS or Viacom stockholders generally.

In considering the recommendation of the CBS board of directors that the holders of CBS Class A common stock deliver a written consent “FOR” the CBS proposals, CBS stockholders should be aware that the executive officers and directors of CBS have interests in the merger that are different from, or in addition to, the interests of CBS stockholders generally. See the section entitled “The Merger—Interests of CBS’ Executive Officers and Directors in the Merger” for a more detailed description of these interests. The CBS special committee and members of the CBS board of directors who recommended that CBS stockholders entitled to vote adopt the merger agreement and approve the merger were aware of, and considered, these interests to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in making the CBS board of directors’ recommendation that CBS stockholders entitled to vote adopt the merger agreement and approve the merger. Holders of CBS Class A common stock should take these or other potential interests into account in deciding whether to deliver a written consent “FOR” the CBS proposals.

In considering the recommendation of the Viacom board of directors that the holders of Viacom Class A common stock deliver a written consent “FOR” the Viacom proposals, Viacom stockholders should be aware that the executive officers and directors of Viacom have interests in the merger that are different from, or in addition to, the interests of Viacom stockholders generally. See the section entitled “The Merger—Interests of Viacoms Executive Officers and Directors in the Merger” for a more detailed description of these interests. The Viacom special committee and the members of the Viacom board of directors who recommended that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger were aware of, and considered, these interests to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in making the Viacom board of directors’ recommendation that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger. Holders of Viacom Class A common stock should take these or other potential interests into account in deciding whether to deliver a written consent “FOR” the Viacom proposals.

The opinions of the CBS special committee’s and the Viacom special committee’s respective financial advisors do not reflect changes in circumstances that may have occurred or that may occur between the signing of the merger agreement and the closing.

Neither the CBS special committee nor the Viacom special committee has obtained updated opinions from their respective financial advisors as of the date of this joint consent solicitation statement/prospectus, nor do either of them expect to receive updated, revised or reaffirmed opinions prior to the closing. Changes in the operations and prospects of CBS or Viacom, general market and economic conditions and other factors that may be beyond the control of CBS or Viacom, and on which such financial advisors’ opinions were based, may significantly alter the value of CBS or Viacom or the share prices of CBS common stock or Viacom common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the date of such opinions. Because such financial advisors will not be updating their opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The CBS board of directors’ recommendation that CBS stockholders entitled to vote approve the CBS proposals and the Viacom board of directors’ recommendation that Viacom stockholders entitled to vote approve the Viacom proposals, however, are made as of the date of this joint consent solicitation statement/prospectus. For a description of the opinions that the CBS special committee and Viacom special

 

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committee received from their respective financial advisors, see the sections entitled “The Merger—Opinions of the CBS Special Committee’s Financial Advisors” and “The Merger—Opinions of the Viacom Special Committee’s Financial Advisors.”

The shares of ViacomCBS common stock to be received by Viacom stockholders upon the closing will have different rights from shares of Viacom common stock.

Upon the closing, Viacom stockholders will no longer be stockholders of Viacom. Instead, former Viacom stockholders will become CBS stockholders and their rights as CBS stockholders will be governed by the laws of the state of Delaware and the terms of the A&R Charter and A&R Bylaws. The A&R Charter and A&R Bylaws are in some respects materially different than the terms of the Viacom charter and the Viacom bylaws, which currently govern the rights of Viacom stockholders. See the section entitled “Comparison of Stockholder Rights” for a discussion of the different rights associated with shares of ViacomCBS common stock and shares of Viacom common stock.

The shares of ViacomCBS common stock to be held by CBS stockholders upon the closing will have different rights from shares of CBS common stock prior to the closing.

Upon the closing, the rights of CBS stockholders will be governed by the laws of the state of Delaware and the terms of the A&R Charter and A&R Bylaws. The A&R Charter and A&R Bylaws are in some respects materially different than the terms of the CBS charter and the CBS bylaws, which currently govern the rights of CBS stockholders. See the section entitled “Comparison of Stockholder Rights” for a discussion of the different rights associated with shares of ViacomCBS common stock and shares of CBS common stock.

Risks Relating to ViacomCBS After the Closing

Although CBS and Viacom expect that the merger will result in synergies and other benefits, those synergies and benefits may not be realized or may not be realized within the expected time frame.

The ability of CBS and Viacom to realize the anticipated benefits of the merger will depend, to a large extent, on ViacomCBS’ ability to integrate CBS’ and Viacom’s businesses in a manner that facilitates growth opportunities and achieves the projected standalone cost savings and revenue growth trends identified by each company without adversely affecting current revenues and investments in future growth. Even if ViacomCBS is able to integrate the two companies successfully, the anticipated benefits of the merger, including the expected synergies, may not be realized fully or at all or may take longer to realize than expected.

CBS’ business and Viacom’s business may not be integrated successfully or such integration may be more difficult, time consuming or costly than expected. Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected following the merger. Revenues following the merger may be lower than expected.

The combination of two independent businesses is complex, costly and time-consuming and may divert significant management attention and resources to combining CBS’ and Viacom’s business practices and operations. This process may disrupt CBS’ and Viacom’s businesses. The failure to meet the challenges involved in combining the two businesses and to realize the anticipated benefits of the merger could cause an interruption of, or a loss of momentum in, the activities of ViacomCBS and could adversely affect the results of operations of ViacomCBS. The overall combination of CBS’ and Viacom’s businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships. The difficulties of combining the operations of the companies include, among others:

 

   

the diversion of management attention to integration matters;

 

   

difficulties in integrating operations and systems, including intellectual property and communications systems, administrative and information technology infrastructure and financial reporting and internal control systems;

 

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challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

 

   

difficulties in integrating employees and attracting and retaining key personnel, including talent;

 

   

challenges in retaining existing, and obtaining new customers, viewers, suppliers, distributors, licensors, lessors, employees, business associates and others, including material content providers, studios, authors, producers, directors, actors and other talents, guilds and advertisers;

 

   

difficulties in achieving anticipated cost savings, synergies, accretion targets, business opportunities, financing plans and growth prospects from the combination;

 

   

difficulties in managing the expanded operations of a significantly larger and more complex company;

 

   

challenges in continuing to develop valuable and widely-accepted content and technologies;

 

   

contingent liabilities that are larger than expected; and

 

   

potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the merger.

Many of these factors are outside of the control of CBS and Viacom and/or will be outside the control of ViacomCBS, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact the business, financial condition and results of operations of ViacomCBS. In addition, even if the operations of the businesses of CBS and Viacom are integrated successfully, the full benefits of the merger may not be realized, including, among others, the synergies, cost savings or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of the businesses of CBS and Viacom. All of these factors could cause dilution to the earnings per share of ViacomCBS, decrease or delay the projected accretive effect of the merger, and negatively impact the price of the ViacomCBS common stock following the merger. As a result, it cannot be assured that the combination of CBS and Viacom will result in the realization of the full benefits expected from the merger within the anticipated time frames or at all.

The financial analyses, estimates and forecasts considered by CBS and Viacom and the financial advisors of their respective special committees may not be realized.

In performing their financial analyses and rendering their opinions regarding the fairness, from a financial point of view, of the exchange ratio to CBS stockholders and the merger consideration to be received by Viacom stockholders, as applicable, each of the respective financial advisors to the CBS special committee and the Viacom special committee relied on, among other things, internal financial analyses, estimates and forecasts relating to CBS and Viacom prepared by or at the direction of the managements of CBS and Viacom, as applicable. See the sections entitled “The Merger—Certain CBS Unaudited Prospective Financial Information” and “The Merger—Certain Viacom Unaudited Prospective Financial Information.” The unaudited prospective financial information of each of CBS, Viacom and ViacomCBS was not prepared with a view toward public disclosure, and the unaudited prospective financial information and the estimated synergies were not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The estimates and assumptions underlying the unaudited prospective financial information and estimated synergies involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions, future tax rates and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond the control of CBS and/or Viacom and will be beyond the control of ViacomCBS. In addition, the unaudited prospective financial information and estimated synergies will

 

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be affected by CBS’, Viacom’s or ViacomCBS’, as applicable, ability to achieve strategic goals, objectives and targets over the applicable periods. As a result, there can be no assurance that the underlying assumptions will prove to be accurate or that the projected results or synergies will be realized, and actual results or synergies likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information and the estimated synergies, whether or not the merger is completed, which could have an adverse effect on ViacomCBS’ business, financial condition and result of operations.

CBS and Viacom have incurred, and will incur, substantial direct and indirect costs as a result of the merger.

CBS and Viacom have incurred, and will incur, substantial expenses in connection with and as a result of completing the merger, including financial advisory, legal, accounting, consulting and other advisory fees and expenses, employee-benefit and related expenses, regulatory filings and filing and printing fees. In addition, over a period of time following the closing, ViacomCBS also expects to incur substantial expenses in connection with integrating and coordinating the businesses, operations, policies and procedures of CBS and Viacom. A portion of the transaction costs related to the merger will be incurred regardless of whether the merger is completed. While CBS and Viacom have assumed that a certain level of transaction expenses will be incurred, factors beyond CBS’ and Viacom’s control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately. These expenses will exceed the costs historically borne by CBS and Viacom. These costs could adversely affect the financial condition and results of operations of CBS and Viacom prior to the merger and of ViacomCBS following the merger.

ViacomCBS’ actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this joint consent solicitation statement/prospectus.

The pro forma financial information contained in this joint consent solicitation statement/prospectus is presented for illustrative purposes only and does not necessarily reflect the operating results or financial position that would have occurred if the merger had been consummated on the dates indicated. The pro forma financial information has been derived from the historical consolidated financial statements of CBS and Viacom, and certain adjustments and assumptions have been made regarding ViacomCBS after giving effect to the merger. The pro forma financial information does not give effect to, among other things, revenue synergies, operating efficiencies, cost savings, future adjustments related to integration or unplanned restructuring activities, or future acquisitions or disposals not yet known or probable.

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate. Such assumptions can be adversely affected by known or unknown facts, risks and uncertainties, many of which are beyond CBS’ or Viacom’s control. Other factors may also affect ViacomCBS’ financial condition or results of operations following the closing. In addition, following the merger, certain adjustments to the accounting policies applied by Viacom or CBS to their respective financial information may be made in order to conform the treatment of such financial information to the accounting policies of ViacomCBS if deemed preferable. In certain cases, the information necessary to determine the appropriate adjustments may not be available until after the closing, and therefore, when conformed, the financial information of ViacomCBS may vary materially from the pro forma financial information contained in this joint consent solicitation statement/prospectus, including, for example, adjustments with respect to revenue and expense recognition. Any material variance from the pro forma financial information may cause significant variations in the market price of the ViacomCBS common stock following the merger. In view of these uncertainties, the inclusion of pro forma financial information in this joint consent solicitation statement/prospectus is for illustrative purposes and does not purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The pro forma financial information represents historical results as if CBS and Viacom had operated as a combined company and does not include future benefits from the merger, such as those resulting from estimated synergies, and related costs, such as those costs expected to achieve certain benefits. See the sections entitled “Selected Unaudited Pro Forma Condensed Combined Financial Data” and “ViacomCBS Inc. Unaudited Pro Forma Condensed Combined Financial Statements.”

 

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The market price for ViacomCBS common stock following the closing may be affected by factors different from those that historically have affected or currently affect CBS common stock and Viacom common stock.

Upon the closing, Viacom stockholders will receive shares of ViacomCBS common stock. ViacomCBS’ business and financial position will differ from the business and financial position of CBS and Viacom before the closing and, accordingly, the results of operations of ViacomCBS will be affected by some factors that are different from those currently affecting the results of operations of CBS and those currently affecting the results of operations of Viacom, as separate companies. Accordingly, the market price and performance of ViacomCBS common stock is likely to be different from the performance of CBS common stock and Viacom common stock in the absence of the merger. In addition, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, ViacomCBS common stock, regardless of ViacomCBS’ actual operating performance. For a discussion of the businesses of CBS and Viacom and some important factors to consider in connection with those businesses, see the documents incorporated by reference into this joint consent solicitation statement/prospectus and referred to under the section entitled “Where You Can Find More Information.”

The merger may not be accretive and may cause dilution to the earnings per share of ViacomCBS, which may negatively affect the market price of the ViacomCBS common stock.

In the merger, based on the estimated number of shares of CBS common stock and Viacom common stock that are expected to be outstanding immediately prior to the closing, it is anticipated that CBS will issue approximately 243 million shares of ViacomCBS common stock. The issuance of these new shares could have the effect of depressing the market price of the ViacomCBS common stock. In addition, CBS or Viacom (or ViacomCBS after the merger) could encounter other transaction-related costs, such as the failure to realize all of the benefits anticipated in the merger, which could cause dilution to ViacomCBS’ earnings per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of the ViacomCBS common stock.

Declaration and amounts of dividends, if any, distributed to ViacomCBS stockholders will be uncertain and are not guaranteed.

Whether any dividends are declared and paid to ViacomCBS stockholders following the merger, and the amounts of any dividends that are declared or paid, are uncertain and are not guaranteed. If dividends are declared, they may not be of the same amount as paid by CBS or Viacom to their respective stockholders prior to the closing. The ViacomCBS board of directors will have the discretion to determine the ViacomCBS dividend policy and decisions regarding whether, when and in what amounts to pay any future distributions will remain at all times entirely at the discretion of the ViacomCBS board of directors, which could change its dividend practices at any time and for any reason.

Consummation of the merger will increase ViacomCBS’ exposure to the risks of operating internationally.

CBS is a mass media company with businesses that operate and have customers worldwide. Although many of CBS’ businesses increasingly involve consumers outside of the U.S., the combination with Viacom will increase the importance of international operations to ViacomCBS’ future operations, growth and prospects. The risks of operating internationally that ViacomCBS faces may therefore be increased upon the closing.

NAI, through its voting control of ViacomCBS, will be in a position to control actions that require stockholder approval.

NAI, through its direct and indirect ownership of ViacomCBS Class A common stock, will have voting control of ViacomCBS. Immediately following the closing, NAI is expected to directly or indirectly own approximately 79.4% of the shares of ViacomCBS Class A common stock outstanding, and approximately 10.1% of the shares of ViacomCBS Class A common stock and ViacomCBS Class B common stock outstanding on a

 

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combined basis (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options). Mr. Sumner M. Redstone is the beneficial owner of the controlling interest in NAI and, accordingly, beneficially owns all such shares. Mr. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, serves as Chairman Emeritus of the CBS board of directors and the Viacom board of directors but will not serve as an officer or director of ViacomCBS following the closing, and Ms. Shari E. Redstone, who is Mr. Redstone’s daughter and the president and a director of NAI, will serve as non-executive Chair of the ViacomCBS board of directors. NAI is controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (which we refer to as the “SMR Trust”), which owns 80% of the voting interest of NAI, and such voting interest of NAI held by the SMR Trust is voted solely by Mr. Redstone until his incapacity or death. The SMR Trust provides that in the event of Mr. Redstone’s death or incapacity, voting control of the NAI voting interest held by the SMR Trust will pass to seven trustees, who will include the non-executive Chair of the ViacomCBS board of directors, Ms. Shari E. Redstone. No member of ViacomCBS’ management is a trustee of the SMR Trust.

Subject to the terms of the Governance Agreement, NAI will be in a position to control the outcome of corporate actions that require, or may be accomplished by, stockholder approval, including amending the A&R Bylaws, the election or removal of directors and transactions involving a change of control. For example, the A&R Bylaws will provide that:

 

   

the affirmative vote of not less than a majority of the aggregate voting power of all outstanding shares of capital stock of ViacomCBS then entitled to vote generally in an election of directors, voting together as a single class, is required for the ViacomCBS stockholders to amend, alter, change, repeal or adopt any bylaws of ViacomCBS;

 

   

any or all of the directors of ViacomCBS may be removed from office at any time prior to the expiration of his or her term of office, with or without cause, only by the affirmative vote of the holders of record of outstanding shares representing at least a majority of all the aggregate voting power of outstanding shares of ViacomCBS common stock then entitled to vote generally in the election of directors, voting together as a single class at a special meeting of the ViacomCBS stockholders called expressly for that purpose; provided that during the two-year period following the closing date, the removal of the Chief Executive Officer of ViacomCBS requires the approval of the ViacomCBS board of directors by the Requisite Approval; provided further, that during the two-year period following the closing date, the NAI Parties are not permitted to remove any other persons who are members of the ViacomCBS board of directors at the effective time in accordance with the merger agreement or who otherwise become members of the ViacomCBS board of directors (other than any of the NAI Affiliated Directors) without the Requisite Approval; and

 

   

in accordance with the DGCL, the ViacomCBS stockholders may act by written consent without a meeting if such stockholders hold the number of shares representing not less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted.

Accordingly, other ViacomCBS stockholders who may have different interests are unable to affect the outcome of any such corporate actions for so long as NAI retains voting control. See the section entitled “Governance Agreement.”

The A&R Charter and the A&R Bylaws will include provisions that will restrict ViacomCBS’ ability to enter into certain transactions involving Paramount without the consent of the NAI Parties.

Consistent with the current Viacom charter and Viacom bylaws, the A&R Charter and the A&R Bylaws will prohibit ViacomCBS from entering into any agreement regarding, voting any shares or providing any consent in favor of, or consummating, any Paramount Transaction, without (1) the prior written consent of the holders of a majority of the ViacomCBS Class A common stock and (2) the prior consent of at least 67% of the members of the ViacomCBS board of directors.

 

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The NAI Parties will be the beneficial holders of a majority of the ViacomCBS Class A common stock as of immediately following the closing. Accordingly, ViacomCBS will be unable to effect any Paramount Transaction without the consent of the NAI Parties for so long as the NAI Parties retain their ownership of a majority of the ViacomCBS Class A common stock.

Sales of NAI’s shares of ViacomCBS common stock, some of which are pledged to lenders, could adversely affect the stock price.

Immediately following the closing, based on the estimated number of shares of CBS common stock and Viacom common stock that are expected to be outstanding immediately prior to the closing, NAI is expected to directly or indirectly own approximately 79.4% of the shares of ViacomCBS Class A common stock outstanding, and approximately 10.1% of the shares of ViacomCBS Class A common stock and ViacomCBS Class B common stock outstanding on a combined basis (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options). Based on information received from NAI, NAI is expected to pledge to its lenders shares of ViacomCBS Class A common stock and ViacomCBS Class B common stock owned directly or indirectly by NAI.

Immediately following the closing, the aggregate number of shares of ViacomCBS common stock expected to be pledged by NAI to its lenders will represent approximately 4.0% of the total outstanding shares of ViacomCBS Class A common stock and ViacomCBS Class B common stock, on a combined basis (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options). Immediately following the closing, the amount of ViacomCBS Class A common stock, which NAI is expected to directly or indirectly own and which is not expected to be pledged by NAI to its lenders is expected to represent approximately 64.0% of the total outstanding shares of ViacomCBS Class A common stock (and based on fully diluted shares outstanding of ViacomCBS, including restricted stock units, performance-based restricted stock units and exercisable options).

If there is a default on NAI’s debt obligations and the lenders foreclose on the pledged shares, the lenders may not effect a transfer, sale or disposition of any pledged shares of ViacomCBS Class A common stock, unless such shares have first been converted into ViacomCBS Class B common stock. A sale of the pledged shares could adversely affect the ViacomCBS common stock share price.

Additionally, if the lenders foreclose on the pledged shares of ViacomCBS Class A common stock, NAI will no longer directly or indirectly own those shares and such lenders would have voting rights in ViacomCBS, unless and until such time as such lenders convert such shares into ViacomCBS Class B common stock in order to sell or transfer the shares. In addition, there can be no assurance that at some future time NAI will not sell or pledge additional shares of ViacomCBS common stock, which could adversely affect the ViacomCBS common stock share price.

The A&R Bylaws will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by ViacomCBS stockholders (or, if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state or federal court located within the State of Delaware), which could discourage lawsuits against ViacomCBS and its directors, officers and employees.

Under the A&R Bylaws, unless the ViacomCBS board of directors consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction, any state or federal court located within the State of Delaware) will be the sole and exclusive forum for:

 

   

any derivative action or proceeding brought on behalf of ViacomCBS;

 

   

any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of ViacomCBS to ViacomCBS or to the ViacomCBS stockholders;

 

   

any action or proceeding asserting a claim against ViacomCBS or any director or officer of ViacomCBS arising pursuant to, or seeking to enforce any right, obligation, or remedy under, any provision of the DGCL, the A&R Charter or the A&R Bylaws (as each may be amended from time to time);

 

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any action or proceeding to interpret, apply, enforce, or determine the validity of any provision or provisions of the A&R Charter or the A&R Bylaws (as each may be amended from time to time), or any amendment thereto or modification thereof;

 

   

any action or proceeding asserting a claim against ViacomCBS or any director or officer of ViacomCBS governed by the internal affairs doctrine; or

 

   

any action or proceeding to determine the result of any vote or action by written consent of stockholders.

To the fullest extent permitted by law, this exclusive forum provision will apply to state and federal law claims although the ViacomCBS stockholders will not be deemed to have waived ViacomCBS’ compliance with the federal securities laws and the rules and regulations thereunder. The enforceability of similar choice of forum provisions in other companies’ bylaws has been challenged in legal proceedings, and the Delaware courts have held that such provisions are valid as they relate to internal affairs claims, such as claims alleging breaches of fiduciary duty or violations of the DGCL, a certificate of incorporation, or bylaws, but are not valid to govern external claims, including claims under the Securities Act.

This exclusive forum provision may limit the ability of the ViacomCBS stockholders to commence litigation in a forum that they prefer, which may discourage such lawsuits against ViacomCBS and its current or former directors, officers and employees. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, ViacomCBS may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect its business, results of operations and financial condition.

Other Risk Factors

As a result of entering into the merger agreement, CBS’ and Viacom’s businesses are, and following the closing, ViacomCBS will be, subject to the risks described above. In addition, CBS and Viacom are, and following the closing, ViacomCBS will be, subject to the risks described in CBS’ Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and Viacom’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, as updated from time to time in their subsequent filings with the SEC, including those incorporated by reference herein. See the section entitled “Where You Can Find More Information” for the location of information incorporated by reference into this joint consent solicitation statement/prospectus.

 

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INFORMATION ABOUT THE COMPANIES

CBS

CBS was organized under the laws of the State of Delaware in 1986. CBS is a mass media company with operations in a number of segments. CBS’ Entertainment segment is composed of the CBS® Television Network; CBS Television Studios®; CBS Global Distribution Group (composed of CBS Studios International and CBS Television Distribution); Network 10; CBS Interactive®; CBS Sports Network®, CBS’ cable network focused on college athletics and other sports; CBS Films®; and CBS’ direct-to-consumer digital streaming services, CBS All Access®, CBSN®, CBS Sports HQ®, ET Live® and 10 All Access®. CBS’ Cable Networks segment is composed of Showtime Networks, which operates premium subscription program services, Showtime® (including its direct-to-consumer digital streaming subscription offering), The Movie Channel® and Flix®, as well as basic cable program services, Pop and Smithsonian Channel (including its direct-to-consumer digital streaming subscription offering). CBS’ Publishing segment is composed of Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster®, Pocket Books®, Scribner®, Gallery Books® and Atria Books®. CBS’ Local Media segment is composed of CBS Television Stations, CBS’ 29 owned broadcast television stations; and CBS Local Digital Media, which operates local websites including content from CBS’ television stations.

CBS’ principal executive offices are located at 51 West 52nd Street, New York, NY 10019 and its phone number is (212) 975-4321. CBS’ website address is www.cbscorporation.com. Information contained on CBS’ website does not constitute part of this joint consent solicitation statement/prospectus. CBS Class A common stock and CBS Class B common stock are currently listed and traded on the NYSE under the symbols “CBS.A” and “CBS,” respectively. Additional information about CBS is included in documents incorporated by reference into this joint consent solicitation statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

Viacom

Viacom was organized as a Delaware corporation in 2005 in connection with Viacom’s separation from CBS, which was effective January 1, 2006. Viacom creates entertainment experiences that drive conversation and culture around the world. Through television, film, digital media, live events, merchandise and solutions, Viacom’s brands connect with diverse, young and young at heart audiences in more than 180 countries. Viacom operates through two reportable segments: Media Networks and Filmed Entertainment. The Media Networks segment provides entertainment content, services and related branded products for consumers in targeted demographics attractive to advertisers, content distributors and retailers through Viacom’s global media brands including flagship brands Nickelodeon®, MTV®, BET®, Comedy Central® and Paramount Network®, as well as Pluto TV, Viacom’s free streaming television platform. The Filmed Entertainment segment develops, produces, finances, acquires and distributes films, television programming and other entertainment content through its Paramount Pictures®, Paramount Players ®, Paramount Animation® and Paramount Television® divisions, in various markets and media worldwide, for itself and for third parties. The Filmed Entertainment segment partners on various projects with key Viacom brands, including Nickelodeon Movies, MTV Films® and BET Films.

Viacom’s principal executive offices are located at 1515 Broadway, New York, NY 10036 and its telephone number is (212) 258-6000. Viacom’s website address is www.viacom.com. Information contained on Viacom’s website does not constitute part of this joint consent solicitation statement/prospectus. Viacom Class A common stock and Viacom Class B common stock are listed and traded on NASDAQ under the symbols “VIA” and “VIAB,” respectively. Additional information about Viacom is included in documents incorporated by reference into this joint consent solicitation statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

 

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NAI

NAI, which is not a party to the merger agreement, is a world leader in the motion picture exhibition industry operating more than 950 movie screens in the U.S., U.K. and Latin America. NAI delivers a superior entertainment experience in theatres around the world under its Showcase, Cinema de Lux, Multiplex, SuperLux and UCI brands. Based in Norwood, Massachusetts, NAI is a closely held company operating under the leadership of the Redstone family. NAI is the controlling stockholder of both Viacom and CBS.

NAI’s principal executive offices are located at 846 University Avenue, Norwood, MA 02062 and its telephone number is (781) 461-1600. NAI’s website address is www.nationalamusements.com. Information contained on NAI’s website does not constitute part of this joint consent solicitation statement/prospectus.

 

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CBS SOLICITATION OF WRITTEN CONSENTS

Executing Consents

If you are a holder of CBS Class A common stock, you may execute a written consent with respect to such Class A common stock to approve the CBS proposals (which is equivalent to a vote “FOR” the CBS proposals) or disapprove, or withhold consent with respect to, the CBS proposals (which is equivalent to a vote “AGAINST” the CBS proposals). If you do not return your written consent, it will have the same effect as a vote against the CBS proposals. If you are a holder of CBS Class A common stock at the close of business on the CBS record date and you return a signed written consent without indicating your decision on the CBS proposals, you will have given your consent to approve the CBS proposals.

CBS Record Date; Stockholders Entitled to Consent

Only holders of CBS Class A common stock of record at the close of business on [●], 2019, the CBS record date, will be entitled to execute and deliver a written consent. Under the CBS charter and the DGCL, each holder of CBS Class A common stock is entitled to one vote for each share of CBS Class A common stock held as of the CBS record date.

Consent Required

Approval of each of the CBS proposals requires the execution and delivery to CBS of one or more written consents by the holders of a majority of the outstanding shares of CBS Class A common stock.

NAI Consent; Support Agreement

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, unless an adverse recommendation change as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination” has occurred and not been rescinded, execute and deliver (or cause to be executed and delivered) a written consent with respect to a majority of the issued and outstanding shares of CBS Class A common stock approving the CBS merger agreement proposal, the CBS stock issuance proposal, the CBS A&R Charter proposal and the CBS A&R Bylaws proposal. The delivery of such written consent will constitute receipt by CBS of the CBS stockholder approval with respect to the CBS merger agreement proposal, the CBS stock issuance proposal, the CBS A&R Charter proposal and the CBS A&R Bylaws proposal. In addition, the NAI Parties have indicated that they intend to deliver a written consent “FOR” the CBS advisory compensation proposal concurrently with the delivery of the NAI CBS written consent.

Share Ownership of and Voting by CBS Executive Officers and Directors

As of the CBS record date, there were [●] shares of CBS Class A common stock outstanding and entitled to consent with respect to the CBS proposals, of which executive officers and directors of CBS and their affiliates owned and were entitled to consent with respect to [●] shares of CBS Class A common stock (excluding shares owned by the NAI Parties), representing approximately [●]% of the shares of CBS Class A common stock outstanding on that date. 

Solicitation of Consents; Expenses

The CBS board of directors is soliciting consents from the holders of CBS Class A common stock with respect to the CBS proposals. The expense of preparing, printing and mailing these consent solicitation materials

 

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is being borne 50% by Viacom and 50% by CBS. CBS and Viacom have engaged MacKenzie as an information agent. Each of CBS and Viacom will pay MacKenzie reasonable and customary compensation for its services in addition to reimbursing MacKenzie for its reasonable out-of-pocket expenses. MacKenzie will not solicit written consents for or on behalf of CBS.

Submission of Consents

If you hold shares of CBS Class A common stock at the close of business on the CBS record date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to CBS before the earlier of the delivery of the NAI CBS written consent and [●], 2019, the CBS consent deadline. Once you have completed, dated and signed the written consent, you may deliver it to CBS by mailing it to CBS Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. You may also submit your written consent online by visiting proxyvote.com and following the instructions described therein.

The delivery of the NAI CBS written consent and the NAI CBS compensation proposal written consent will constitute receipt by CBS of the stockholder approvals required for the CBS proposals, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of CBS Class A common stock after the delivery of the NAI CBS written consent, will not have any effect on the approval of the CBS proposals.

Revocation of Consents

Your consent to the CBS proposals may be changed or revoked at any time before the earlier of the delivery of the NAI CBS written consent and the CBS consent deadline. However, under the Support Agreement, the NAI Parties have agreed to deliver the NAI CBS written consent promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. Because the delivery of the NAI CBS written consent and the NAI CBS compensation proposal written consent will constitute receipt by CBS of the stockholder approvals required for the CBS proposals, the delivery, change or revocation of a written consent by any other CBS stockholder entitled to vote with respect to the CBS proposals after the delivery of the NAI CBS written consent will not have any effect. If you wish to change or revoke a previously given consent in accordance with the above, you may do so by mailing a notice of revocation or a new written consent with a later date to CBS Corporation, c/o Broadridge, P.O. Box 9111, Farmingdale, NY 11735-9543 or by submitting a new written consent with a later date online by visiting proxyvote.com and following the instructions described therein.

Recommendations of the CBS Special Committee and the CBS Board of Directors

At a meeting held on August 13, 2019, the CBS special committee unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) approved the merger agreement and the contemplated transactions, including the merger, and (3) recommended that the CBS board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger and the stock issuance.

At a meeting of the CBS board of directors held on August 13, 2019, following the meeting of the CBS special committee, the members of the CBS board of directors who were present at such meeting unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws and (3) recommended that the CBS stockholders entitled to vote adopt the

 

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merger agreement and approve the stock issuance. The members of the CBS board of directors who were present at the meeting were Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman and Frederick O. Terrell, each of whom is a member of the CBS special committee and is unaffiliated with NAI, and who collectively constitute more than two-thirds of the members of the CBS board of directors unaffiliated with NAI. The three members of the CBS board of directors who are not members of the CBS special committee, Shari E. Redstone, Robert N. Klieger and Strauss Zelnick, delivered waivers of notice prior to the meeting and were not present at the meeting. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The CBS board of directors recommends that CBS stockholders entitled to vote approve the CBS proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

For factors considered by the CBS special committee and the CBS board of directors in approving the merger agreement, see the section entitled “The Merger—Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement.”

Other Information

The matters to be considered by the CBS proposals are of great importance to CBS stockholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference herein and, with respect to your shares of CBS Class A common stock, complete, date, sign and promptly return the consent furnished with this joint consent solicitation statement/prospectus by the CBS consent deadline.

Assistance

If you need assistance in completing your consent card or have questions regarding the CBS proposals, please contact the information agent of CBS:

MacKenzie Partners, Inc.

1407 Broadway

New York, NY 10018

Toll-Free: (888) 410-7851

Viacom-CBS@mackenziepartners.com

 

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CBS PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

Holders of CBS Class A common stock are being asked to adopt the merger agreement, a copy of which is included as Annex B and Annex C to this joint consent solicitation statement/prospectus, and approve the merger (CBS Proposal 1, which we refer to as the “CBS merger agreement proposal”). In the event the CBS merger agreement proposal is not approved, the merger will not be completed. In the event the CBS merger agreement proposal is approved, but the merger agreement is terminated prior to the closing, the merger will not be completed.

Approval of the CBS merger agreement proposal requires the consent of the holders of a majority of the issued and outstanding shares of CBS Class A common stock. However, the delivery of the NAI CBS written consent will constitute receipt by CBS of such approval, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of CBS Class A common stock after the delivery of the NAI CBS written consent, will not have any effect on the approval of the CBS merger agreement proposal.

The CBS special committee and the CBS board of directors have considered the terms of the merger agreement. Following the CBS special committee’s unanimous approval of the merger agreement and the contemplated transactions, its determination that the merger is advisable and in the best interests of CBS and its stockholders, and its recommendation to the CBS board of directors with respect thereto, the members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee) unanimously determined that the entry into the merger agreement and the contemplated transactions are advisable and in the best interests of CBS and its stockholders adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, and recommended that CBS stockholders entitled to vote adopt the CBS merger agreement proposal.

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” the CBS merger agreement proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the CBS merger agreement proposal.

 

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CBS PROPOSAL 2—APPROVAL OF THE STOCK ISSUANCE

Holders of CBS Class A common stock are being asked to approve the issuance of ViacomCBS common stock to the eligible Viacom stockholders in accordance with the provisions of the merger agreement (CBS Proposal 2, which we refer to as the “CBS stock issuance proposal”). In the merger, (1) each share of Viacom Class A common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class A common stock and (2) each share of Viacom Class B common stock, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class B common stock, as further described in the section entitled “The Merger Agreement—Merger Consideration.” In the event the CBS stock issuance proposal is not approved, the merger will not be completed. In the event the CBS stock issuance proposal is approved, but the merger agreement is terminated prior to the closing, CBS will not issue any shares of common stock as a result of the approval of the CBS stock issuance proposal.

Approval of the CBS stock issuance proposal requires the consent of the holders of a majority of the issued and outstanding shares of CBS Class A common stock. However, the delivery of the NAI CBS written consent will constitute receipt by CBS of such approval, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of CBS Class A common stock after the delivery of the NAI CBS written consent, will not have any effect on the approval of the CBS stock issuance proposal.

The members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee) unanimously approved the merger agreement and the contemplated transactions, including the stock issuance, as further described in the sections entitled “The Merger” and “The Merger Agreement.”

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” the CBS stock issuance proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the CBS stock issuance proposal.

 

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CBS PROPOSAL 3—APPROVAL TO ADOPT AMENDMENTS TO THE CERTIFICATE OF INCORPORATION

Holders of CBS Class A common stock are being asked to approve the adoption of amendments to the certificate of incorporation of CBS (CBS Proposal 3, which we refer to as the “CBS A&R Charter proposal”). The amended and restated certificate of incorporation is included as Annex G to this joint consent solicitation statement/prospectus. If the CBS A&R Charter proposal is approved but either the CBS merger agreement proposal or the CBS stock issuance proposal is not approved or the CBS merger agreement proposal and CBS stock issuance proposal are approved but the merger agreement is terminated prior to the closing, the CBS board of directors will abandon the amended and restated certificate of incorporation without further action by CBS stockholders.

Holders of CBS Class A common stock should read the A&R Charter in its entirety. The key amendments included in the A&R Charter are as follows:

 

   

the name of the combined company will be “ViacomCBS Inc.”;

 

   

the number of authorized shares of ViacomCBS Class A common stock will be decreased from 375 million to 55 million shares;

 

   

the number of directors constituting the entire ViacomCBS board of directors will be fixed at 13 members for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval;

 

   

without the Requisite Approval, the ViacomCBS board of directors may not amend, alter, change, repeal, adopt any new or modified provision of or other resolution inconsistent with, or recommend that the stockholders take any of the foregoing actions with respect to, certain provisions of the A&R Bylaws relating to (1) the composition of the ViacomCBS board of directors and the senior management team of ViacomCBS or the fiscal year of ViacomCBS, in each case, for a period of two years following the closing, and (2) certain actions the ViacomCBS board of directors may take in respect of the Chairman and Chief Executive Officer of the CBS business or the powers, duties and reporting relationship in respect of the Chairman and Chief Executive Officer of the CBS business, in each case, for a period of 15 months following the closing; and

 

   

ViacomCBS may not enter into any Paramount Transaction without the prior written consent of the holders of a majority of outstanding ViacomCBS Class A common stock.

Additionally, the A&R Charter will reflect the removal of a provision providing for a waiver by CBS of certain corporate opportunities that may be of interest to Viacom that was included in the certificate of incorporation of CBS at the time of the separation of CBS and Viacom into two separate companies in 2006, since the combination of the CBS and Viacom businesses will obviate the need for such a waiver.

Approval by the holders of CBS Class A common stock of the CBS A&R Charter proposal is not required in order to complete the merger. However, the delivery of the NAI CBS written consent will constitute receipt by CBS of the stockholder approval required for the CBS A&R Charter proposal, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of CBS Class A common stock after the delivery of the NAI CBS written consent, will not have any effect on the approval of the CBS A&R Charter proposal.

The members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee) unanimously approved the merger agreement and the contemplated transactions, including the adoption of amendments to the certificate of incorporation of CBS, as further described in the sections entitled “The Merger” and “The Merger Agreement.”

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” the CBS A&R Charter proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the CBS A&R Charter proposal.

 

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CBS PROPOSAL 4—APPROVAL TO ADOPT AMENDMENTS TO THE BYLAWS

Holders of CBS Class A common stock are being asked to approve the adoption of amendments to the bylaws of CBS (CBS Proposal 4, which we refer to as the “CBS A&R Bylaws proposal”). The amended and restated bylaws are included as Annex H to this joint consent solicitation statement/prospectus. If the CBS A&R Bylaws proposal is approved but either the CBS merger agreement proposal or the CBS stock issuance proposal is not approved or the CBS merger agreement proposal and CBS stock issuance proposal are approved but the merger agreement is terminated prior to the closing, the CBS board of directors will abandon the amended and restated bylaws without further action by CBS stockholders.

Holders of CBS Class A common stock should read the amended and restated bylaws in their entirety. The amended and restated bylaws will provide that, among other things,

 

   

as of the effective time, the ViacomCBS board of directors will be composed of six Initial CBS Directors, four Initial Viacom Directors, two directors designated by NAI and the Chief Executive Officer of ViacomCBS;

 

   

for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, (1) the number of directors constituting the entire ViacomCBS board of directors will be fixed at 13 members and (2) any vacancy on the ViacomCBS board of directors will be filled by a nominee approved by the Requisite Approval upon the recommendation of the Nominating and Governance Committee (acting by a majority vote) following customary public company practices, except for any vacancy resulting from the departure of any NAI Affiliated Director, which vacancy may be filled by the ViacomCBS stockholders in accordance with the A&R Charter and the A&R Bylaws;

 

   

for a period of two years following the closing, unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, (1) the standing committees of the ViacomCBS board of directors will consist of the Audit Committee chaired by an Initial CBS Director, the Compensation Committee chaired by an Initial CBS Director and the Nominating and Governance Committee chaired by an Initial Viacom Director, (2) the members of each of the foregoing committees will be designated, appointed and approved by the Requisite Approval and (3) the foregoing committees will be composed solely of an equal number of Initial CBS Directors and Initial Viacom Directors and each such committee member must meet all director independence and other standards of NASDAQ (or, if ViacomCBS is listed on the NYSE, all director independence and other standards of the NYSE) and SEC applicable to his or her service;

 

   

unless the ViacomCBS board of directors adopts a resolution to the contrary that is approved by the Requisite Approval, (1) Mr. Bakish will serve as Chief Executive Officer, (2) Ms. Spade will serve as Executive Vice President, Chief Financial Officer, (3) Ms. D’Alimonte will serve as Executive Vice President, General Counsel and (4) Ms. Franco will serve as Executive Vice President and General Counsel of the CBS business, in each case, for a period of two years following the closing and except in the case of such officer’s voluntary departure from ViacomCBS, and (5) Mr. Ianniello will serve as Chairman and Chief Executive Officer of the CBS business during the period commencing on the closing and ending on the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing (the individuals described in (1)-(5) are collectively referred to as the “Existing Specified Executives”);

 

   

the approval of the ViacomCBS board of directors acting by the Requisite Approval will be required for the following:

 

   

the election, hiring or appointment of (1) any employee who serves in the capacity of (or who would, if appointed, serve in the capacity of) chief operating officer of ViacomCBS or any other position with substantially similar responsibilities, until the second anniversary of the closing, (2) any employee who served as chief executive officer, chief financial officer, chief operating officer or general counsel at CBS or Viacom at any time prior to the effective time (but excluding

 

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the Existing Specified Executives), until the second anniversary of the closing, and (3) the Chairman and Chief Executive Officer of the CBS business, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

the termination or removal of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business), until the second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

any modification to any of the duties, authority or reporting relationships of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business) having a material effect, until the second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business having a material effect, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

any modification to the compensation arrangements of (1) the Existing Specified Executives (other than the Chairman and Chief Executive Officer of the CBS business) having a material effect, until the second anniversary of the closing, and (2) the Chairman and Chief Executive Officer of the CBS business having a material effect, until the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

without the Requisite Approval, the ViacomCBS board of directors may not amend, alter, change, repeal, adopt any new or modified provision of or other resolution inconsistent with, or recommend that the stockholders take any of the foregoing actions with respect to, certain provisions of the A&R Bylaws relating to (1) the composition of the ViacomCBS board of directors and the senior management team of ViacomCBS or the fiscal year of ViacomCBS, in each case, for a period of two years following the closing, and (2) certain actions the ViacomCBS board of directors may take in respect of the Chairman and Chief Executive Officer of the CBS business or the powers, duties and reporting relationship in respect of the Chairman and Chief Executive Officer of the CBS business, in each case, during the period commencing on the closing and ending on the earlier of (i) Mr. Ianniello’s voluntary departure from ViacomCBS and (ii) 15 months following the closing;

 

   

none of the ViacomCBS board of directors (or any committee thereof), any member of the ViacomCBS board of directors or any executive officer of ViacomCBS may authorize, agree to, knowingly cause or permit to enter into, directly or indirectly, any Paramount Transaction without the prior consent of at least 67% of the members of the ViacomCBS board of directors; and

 

   

the fiscal year of ViacomCBS will end on December 31, unless otherwise resolved by the ViacomCBS board of directors (which requires the Requisite Approval for a period of two years following the closing).

Approval of the holders of CBS Class A common stock of the CBS A&R Bylaws proposal is not required in order to complete the merger. However, the delivery of the NAI CBS written consent will constitute receipt by CBS of the stockholder approval required for the CBS A&R Bylaws proposal, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of CBS Class A common stock after the delivery of the NAI CBS written consent, will not have any effect on the CBS A&R Bylaws proposal.

The members of the CBS board of directors who were present at a meeting thereof (the only members of the CBS board of directors present were the members of the CBS special committee) unanimously approved the merger agreement and the contemplated transactions, including the adoption of amendments to the bylaws of CBS, as further described in the sections entitled “The Merger” and “The Merger Agreement.”

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” the CBS A&R Bylaws proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the CBS A&R Bylaws proposal.

 

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CBS PROPOSAL 5—ADVISORY (NON-BINDING) VOTE ON COMPENSATION

CBS is providing the holders of CBS Class A common stock with the opportunity to approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the CBS named executive officers set forth in the CBS 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to CBS’ Named Executive Officers in Connection with the Merger,” as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (CBS Proposal 5, which we refer to as the “CBS advisory compensation proposal”).

The compensation that the CBS named executive officers set forth in the CBS 402(t) table will or may be entitled to receive from CBS in connection with the merger is summarized in the CBS 402(t) table. That summary includes all compensation and benefits that will or may be paid or provided by CBS to the CBS named executive officers set forth in the CBS 402(t) table in connection with the merger, including as a result of a termination of employment in connection with the merger.

The CBS board of directors encourages you to review carefully the information regarding certain compensation that will or may be payable to the CBS named executive officers set forth in the CBS 402(t) table in connection with the merger disclosed in this joint consent solicitation statement/prospectus.

The CBS board of directors recommends that CBS stockholders entitled to vote approve the following resolution:

“RESOLVED, that the stockholders of CBS approve, on an advisory (non-binding) basis, certain compensation that will or may be payable to certain of the CBS named executive officers in connection with the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in the CBS 402(t) table and the related narrative disclosures.”

The consent to the CBS advisory compensation proposal is a consent separate and apart from the consent to the adoption of the merger agreement and approval of the merger. Accordingly, you may consent to the approval and adoption of the merger agreement and withhold consent to the CBS advisory compensation proposal and vice versa. Because the consent to the CBS advisory compensation proposal is advisory only, it will not be binding on either CBS or Viacom. Accordingly, if the merger agreement is approved and adopted and the merger is completed, the compensation payments that are contractually required to be paid by CBS to the CBS named executive officers set forth in the CBS 402(t) table will or may be paid, subject only to the conditions applicable thereto, regardless of the outcome of the advisory (non-binding) consent of CBS stockholders entitled to vote.

The consent of the holders of a majority of the issued and outstanding shares of CBS Class A common stock will be required to approve, on an advisory (non-binding) basis, the CBS advisory compensation proposal. However, the delivery of the NAI CBS compensation proposal written consent will constitute receipt by CBS of such approval, and a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent by any other holder of CBS Class A common stock after the delivery of the NAI CBS compensation proposal written consent, will not have any effect on the approval of the CBS advisory compensation proposal.

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” the CBS advisory compensation proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the CBS advisory compensation proposal.

 

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VIACOM SOLICITATION OF WRITTEN CONSENTS

Executing Consents

If you are a holder of Viacom Class A common stock, you may execute a written consent with respect to such Class A common stock to approve the Viacom proposals (which is equivalent to a vote “FOR” the Viacom proposals) or disapprove, or withhold consent with respect to, the Viacom proposals (which is equivalent to a vote “AGAINST” the Viacom proposals). If you do not return your written consent, it will have the same effect as a vote against the Viacom proposals. If you are a holder of Viacom Class A common stock at the close of business on the Viacom record date and you return a signed written consent without indicating your decision on the Viacom proposals, you will have given your consent to approve the Viacom proposals.

Viacom Record Date; Stockholders Entitled to Consent

Only holders of Viacom Class A common stock of record at the close of business on [●], 2019, the Viacom record date, will be entitled to execute and deliver a written consent. Under the Viacom charter and the DGCL, each holder of Viacom Class A common stock is entitled to one vote for each share of Viacom Class A common stock held as of the Viacom record date.

Consent Required

Approval of each of the Viacom proposals requires the execution and delivery to Viacom of one or more written consents by the holders of a majority of the outstanding shares of Viacom Class A common stock.

NAI Consent; Support Agreement

Concurrently with the execution of the merger agreement, CBS and Viacom entered into the Support Agreement with the NAI Parties. Pursuant to the Support Agreement, the NAI Parties agreed to, promptly (and in any event within one business day) after the registration statement is declared effective by the SEC, unless an adverse recommendation change as described in the section entitled “The Merger Agreement—Covenants of the Parties—Adverse Recommendation Change; Superior Proposal Termination” has occurred and not been rescinded, execute and deliver (or cause to be executed and delivered) a written consent with respect to a majority of the issued and outstanding shares of Viacom Class A common stock approving the Viacom merger agreement proposal. The delivery of such written consent will constitute receipt by Viacom of the Viacom stockholder approval with respect to the Viacom merger agreement proposal. In addition, the NAI Parties have indicated that they intend to deliver a written consent “FOR” the Viacom advisory compensation proposal concurrently with the delivery of the NAI Viacom written consent.

Share Ownership of and Voting by Viacom Executive Officers and Directors

As of the Viacom record date, there were [●] shares of Viacom Class A common stock outstanding and entitled to consent with respect to the Viacom proposals, of which executive officers and directors of Viacom and their affiliates owned and were entitled to consent with respect to [●] shares of Viacom Class A common stock (excluding shares owned by the NAI Parties), representing approximately [●]% of the shares of Viacom Class A common stock outstanding on that date. 

Solicitation of Consents; Expenses

The Viacom board of directors is soliciting consents from the holders of Viacom Class A common stock with respect to the Viacom proposals. The expense of preparing, printing and mailing these consent solicitation

 

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materials is being borne 50% by Viacom and 50% by CBS. CBS and Viacom have engaged MacKenzie as an information agent. Each of CBS and Viacom will pay MacKenzie reasonable and customary compensation for its services in addition to reimbursing MacKenzie for its reasonable out-of-pocket expenses. MacKenzie will not solicit written consents for or on behalf of Viacom.

Submission of Consents

If you hold shares of Viacom Class A common stock at the close of business on the Viacom record date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to Viacom before the earlier of the delivery of the NAI Viacom written consent and [●], 2019, the Viacom consent deadline. Once you have completed, dated and signed the written consent, you may deliver it to Viacom by mailing it to Viacom Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. You may also submit your written consent online by visiting proxyvote.com and following the instructions described therein.

The delivery of the NAI Viacom written consent and the NAI Viacom compensation proposal written consent will constitute receipt by Viacom of the stockholder approvals required for the Viacom proposals, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of Viacom Class A common stock after the delivery of the NAI Viacom written consent, will not have any effect on the approval of the Viacom proposals.

Revocation of Consents

Your consent to the Viacom proposals may be changed or revoked at any time before the earlier of the delivery of the NAI Viacom written consent and the Viacom consent deadline. However, under the Support Agreement, the NAI Parties have agreed to deliver the NAI Viacom written consent promptly, and in any event within one business day, after the registration statement is declared effective by the SEC. Because the delivery of the NAI Viacom written consent and the NAI Viacom compensation proposal written consent will constitute receipt by Viacom of the stockholder approvals required for the Viacom proposals, the delivery, change or revocation of a written consent by any other Viacom stockholder entitled to vote with respect to the Viacom proposals after the delivery of the NAI Viacom written consent will not have any effect. If you wish to change or revoke a previously given consent in accordance with the above, you may do so by mailing a notice of revocation or a new written consent with a later date to Viacom Inc., c/o Broadridge, P.O. Box 9111, Farmingdale, NY 11735-9543 or by submitting a new written consent with a later date online by visiting proxyvote.com and following the instructions described therein.

Recommendations of the Viacom Special Committee and the Viacom Board of Directors

The Viacom special committee and the Viacom board of directors considered the terms of the merger agreement. Following the unanimous determination by the Viacom special committee that the entry into the merger agreement and the consummation of the contemplated transactions are advisable and in the best interests of Viacom and its stockholders and the unanimous recommendation by the Viacom special committee that the Viacom board of directors approve and declare advisable the merger agreement and the consummation of the contemplated transactions, the members of the Viacom board of directors who were present at the meeting of the Viacom board of directors held on August 13, 2019 (each of whom is unaffiliated with NAI) unanimously determined that entering into the merger agreement and consummating the contemplated transactions are in the best interests of Viacom and its stockholders, approved and declared advisable the merger agreement and the consummation of the contemplated transactions, including the merger, and recommended that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The Viacom board of directors recommends that Viacom stockholders entitled to vote deliver a written consent “FOR” the Viacom merger agreement proposal and “FOR” the Viacom advisory compensation proposal.

For factors considered by the Viacom special committee and the Viacom board of directors in approving the merger agreement, see the section entitled “The Merger—Recommendations of the Viacom Special Committee and the Viacom Board of Directors; Reasons for Viacom to Enter into the Merger Agreement.”

 

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Other Information

The matters to be considered by the Viacom proposals are of great importance to Viacom stockholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference herein and, with respect to your shares of Viacom Class A common stock, complete, date, sign and promptly return the consent furnished with this joint consent solicitation statement/prospectus by the Viacom consent deadline.

Assistance

If you need assistance in completing your consent card or have questions regarding the Viacom proposals, please contact the information agent of Viacom:

MacKenzie Partners, Inc.

1407 Broadway

New York, NY 10018

Toll-Free: (888) 410-7851

Viacom-CBS@mackenziepartners.com

 

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VIACOM PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

Holders of Viacom Class A common stock are being asked to adopt the merger agreement, a copy of which is included as Annex B and Annex C to this joint consent solicitation statement/prospectus, and approve the merger (Viacom Proposal 1, which we refer to as the “Viacom merger agreement proposal”). In the event the Viacom merger agreement proposal is not approved, the merger will not be completed. In the event the Viacom merger agreement proposal is approved, but the merger agreement is terminated prior to the closing, the merger will not be completed.

Approval of the Viacom merger agreement proposal requires the consent of the holders of a majority of the issued and outstanding shares of Viacom Class A common stock. However, the delivery of the NAI Viacom written consent will constitute receipt by Viacom of such approval, and therefore a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent, by any other holder of Viacom Class A common stock after the delivery of the NAI Viacom written consent, will not have any effect on the approval of the Viacom merger agreement proposal.

The Viacom special committee and the Viacom board of directors considered the terms of the merger agreement. Following the unanimous determination by the Viacom special committee that the entry into the merger agreement and the consummation of the contemplated transactions are advisable and in the best interests of Viacom and its stockholders and the unanimous recommendation by the Viacom special committee that the Viacom board of directors approve and declare advisable the merger agreement and the consummation of the contemplated transactions, the members of the Viacom board of directors who were present (each of whom is unaffiliated with NAI) unanimously determined that entering into the merger agreement and consummating the contemplated transactions are in the best interests of Viacom and its stockholders, approved and declared advisable the merger agreement and the consummation of the contemplated transactions, including the merger, and recommended that Viacom stockholders entitled to vote adopt the merger agreement and approve the merger.

The Viacom board of directors recommends that Viacom stockholders entitled to vote deliver a written consent “FOR” the Viacom merger agreement proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the Viacom merger agreement proposal.

 

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VIACOM PROPOSAL 2—ADVISORY (NON-BINDING) VOTE ON COMPENSATION

Viacom is providing the holders of Viacom Class A common stock with the opportunity to approve, on a non-binding, advisory basis, certain compensation that will or may be payable to the Viacom named executive officers set forth in the Viacom 402(t) table set forth under the section entitled “The Merger—Quantification of Potential Payments and Benefits to Viacom’s Named Executive Officers in Connection with the Merger,” as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Viacom Proposal 2, which we refer to as the “Viacom advisory compensation proposal”).

The compensation that the Viacom named executive officers set forth in the Viacom 402(t) table will or may be entitled to receive from Viacom in connection with the merger is summarized in the Viacom 402(t) table. That summary includes all compensation and benefits that will or may be paid or provided by Viacom to the Viacom named executive officers set forth in the Viacom 402(t) table in connection with the merger, including as a result of a termination of employment in connection with the merger.

The Viacom board of directors encourages you to review carefully the information regarding certain compensation that will or may be payable to the Viacom named executive officers set forth in the Viacom 402(t) table in connection with the merger disclosed in this joint consent solicitation statement/prospectus.

The Viacom board of directors recommends that Viacom stockholders entitled to vote approve the following resolution:

“RESOLVED, that the stockholders of Viacom approve, on an advisory (non-binding) basis, certain compensation that will or may be payable to certain of the Viacom named executive officers in connection with the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in the Viacom 402(t) table and the related narrative disclosures.”

The consent to the Viacom advisory compensation proposal is a consent separate and apart from the consent to the adoption of the merger agreement and approval of the merger. Accordingly, you may consent to the approval and adoption of the merger agreement and withhold consent to the Viacom advisory compensation proposal and vice versa. Because the consent to the Viacom advisory compensation proposal is advisory only, it will not be binding on either Viacom or CBS. Accordingly, if the merger agreement is approved and adopted and the merger is completed, the compensation payments that are contractually required to be paid by Viacom to the Viacom named executive officers set forth in the Viacom 402(t) table will or may be paid, subject only to the conditions applicable thereto, regardless of the outcome of the advisory (non-binding) consent of Viacom stockholders entitled to vote.

The consent of the holders of a majority of the issued and outstanding shares of Viacom Class A common stock will be required to approve, on an advisory (non-binding) basis, the Viacom advisory compensation proposal. However, the delivery of the NAI Viacom compensation proposal written consent will constitute receipt by Viacom of such approval, and a failure to deliver a written consent, as well as the delivery, change or revocation of a written consent by any other holder of Viacom Class A common stock after the delivery of the NAI Viacom compensation proposal written consent, will not have any effect on the approval of the Viacom advisory compensation proposal.

The Viacom board of directors recommends that Viacom stockholders entitled to vote deliver a written consent “FOR” the Viacom advisory compensation proposal.

Abstentions and broker non-votes will have the same effect as delivering consents marked “WITHHOLD CONSENT” as to the Viacom advisory compensation proposal.

 

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THE MERGER

This discussion of the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this joint consent solicitation statement/prospectus as Annex B and Annex C and is incorporated by reference into this joint consent solicitation statement/prospectus. This summary does not purport to be complete and may not provide all of the information about the merger that might be important to you. You should read the merger agreement carefully and in its entirety as it is the legal document that governs the merger. This section is not intended to provide you with any factual information about CBS or Viacom. Such information can be found elsewhere in this joint consent solicitation statement/prospectus and in the public filings CBS and Viacom make with the SEC that are incorporated by reference into this joint consent solicitation statement/prospectus, as described in the section entitled “Where You Can Find More Information.”

General

On August 13, 2019, CBS and Viacom entered into an agreement and plan of merger, as amended by the merger agreement amendment dated as of October 16, 2019, pursuant to which CBS and Viacom agreed to combine their respective businesses.

The agreement and plan of merger and the contemplated transactions were approved by the unanimous vote of the members of the CBS board of directors who were present at a meeting thereof held on August 13, 2019, following a meeting of the CBS special committee, acting upon the unanimous recommendation of the CBS special committee. The members of the CBS board of directors who were present at the meeting were Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman and Frederick O. Terrell (each of whom is a member of the CBS special committee and is unaffiliated with NAI, and who collectively constitute more than two-thirds of the members of the CBS board of directors unaffiliated with NAI). The three members of the CBS board of directors who are not members of the CBS special committee, Shari E. Redstone, Robert N. Klieger and Strauss Zelnick, delivered waivers of notice prior to the meeting and were not present at the meeting.

The agreement and plan of merger and the contemplated transactions were approved by the unanimous vote of the members of the Viacom board of directors who were present at a meeting thereof (each of whom is unaffiliated with NAI) held on August 13, 2019, following a meeting of the Viacom special committee, acting upon the unanimous recommendation of the Viacom special committee. The members of the Viacom board of directors who were present at the meeting were Robert M. Bakish, Thomas J. May, Judith A. McHale, Ronald L. Nelson, Charles E. Phillips, Jr., Nicole Seligman and Cristiana Falcone Sorrell. Two members of the Viacom board of directors, Shari E. Redstone and Deborah Norville, recused themselves from the meeting and were not in attendance.

On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The merger agreement provides that, upon the terms and subject to the conditions set forth therein, Viacom will merge with and into CBS, with CBS continuing as the surviving company. At the effective time, the name of the combined company will be changed to “ViacomCBS Inc.”

Exchange Ratio; Consideration to Viacom Stockholders

At the effective time, (1) each share of Viacom Class A common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class A common stock and (2) each share of Viacom Class B common stock issued and outstanding immediately prior to the effective time, other than shares held directly by Viacom as treasury shares or held by CBS, will be converted automatically into 0.59625 shares of ViacomCBS Class B common stock.

 

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No fractional shares of ViacomCBS common stock will be issued in the merger, and Viacom stockholders will receive cash in lieu of any such fractional shares as described in the section entitled “The Merger Agreement—Exchange of Viacom Common Stock; No Fractional Shares.”

The merger will not result in an exchange of outstanding shares of CBS common stock. However, immediately after the effective time, the name of CBS will be changed to “ViacomCBS Inc.” At the effective time, each share of CBS Class A common stock and each share of CBS Class B common stock issued and outstanding immediately prior to the effective time will remain an issued and outstanding share of Class A common stock and Class B common stock of ViacomCBS, respectively.

The NAI Parties and their affiliates will receive the same amount of ViacomCBS common stock per share of Viacom common stock in the merger as all other Viacom stockholders.

Treatment of Equity Awards

CBS Equity Awards

At the effective time, each CBS equity award that is outstanding immediately prior to the effective time will continue to remain outstanding as a stock-based award of ViacomCBS; however, (1) the number of underlying shares subject to a CBS PSU award will be fixed based on actual performance, if the applicable performance period has been completed prior to the effective time, or target performance, if the applicable performance period has not yet been completed prior to the effective time, and (2) awards held by non-employee directors who will not serve on the ViacomCBS board of directors will vest in full immediately prior to the effective time.

Viacom Equity Awards

At the effective time, each Viacom stock option that is outstanding will be converted automatically into a ViacomCBS stock option, generally on the same terms and conditions, with respect to a number of shares of ViacomCBS Class B common stock (rounded down to the nearest whole share) equal to the number of shares of Viacom Class B common stock subject to the stock option immediately prior to the effective time multiplied by the exchange ratio, at an exercise price (rounded up to the nearest hundredths of a cent) equal to the exercise price of the stock option immediately prior to the effective time divided by the exchange ratio.

Any Viacom RSU award held by a non-employee member of the Viacom board of directors who will not serve on the ViacomCBS board of directors will vest immediately prior to the effective time. At the effective time, each other Viacom RSU award that is outstanding will be converted into a ViacomCBS RSU award, generally on the same terms and conditions, with respect to a number of shares of ViacomCBS Class B common stock (rounded to the nearest whole share) equal to the number of shares of Viacom Class B common stock subject to the Viacom RSU award immediately prior to the effective time multiplied by the exchange ratio.

At the effective time, each Viacom PSU award that is outstanding will be converted automatically into a ViacomCBS RSU award, generally on the same terms and conditions, other than the requirement to achieve any performance goals, with respect to a number of shares of ViacomCBS Class B common stock (rounded to the nearest whole share) equal to (1) the number of shares of Viacom Class B common stock subject to the Viacom PSU award immediately prior to the effective time based on actual performance for any portion of such award for which the applicable performance period has been completed prior to the effective time, and otherwise target performance, multiplied by (2) the exchange ratio.

At the effective time, any cash amounts under a benefit plan maintained by Viacom, including any Viacom Employee DC Plan or dividend equivalent arrangement, that may be settled in shares of Viacom common stock or that track the value of a share of Viacom common stock will be converted into a cash amount that may be settled in shares of ViacomCBS common stock or, following multiplication of such amounts by the exchange ratio, tracks the value of a share of ViacomCBS common stock.

 

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Background of the Merger

The management and boards of directors of CBS and Viacom, together with representatives of NAI, the controlling stockholder of CBS and Viacom, regularly review the performance, strategy, competitive position, opportunities and prospects of their respective companies in light of the then-current business and economic environments, as well as developments in the industries in which the companies operate, and the opportunities and challenges facing participants in those industries. These reviews have included consideration of, and discussions with other companies from time to time regarding, potential strategic alternatives, including business combinations and other strategic transactions, as well as the possibility of CBS and Viacom combining or remaining as separate, standalone companies.

In connection with those reviews, representatives of CBS, Viacom and NAI have held discussions from time to time regarding a possible business combination between CBS and Viacom.

In September 2016, following settlement of litigation between NAI and Viacom and certain Viacom directors that resulted in changes to the senior management and board of directors of Viacom, representatives of NAI sent a letter to each of the CBS board of directors and Viacom board of directors requesting that the two companies consider a potential business combination. NAI’s letter stated that all of the members of the CBS and Viacom boards of directors affiliated with NAI would recuse themselves from participating in any deliberations or votes related to such potential business combination, but that NAI would not accept or support any acquisition by a third party of either company or any transaction that would result in NAI surrendering its controlling position in either company or not controlling the combined company.

Following the receipt of such letter, the CBS board of directors and Viacom board of directors each formed a special committee of independent directors to review and consider the potential for such a transaction. On October 5, 2016, the special committee of independent directors of CBS engaged Lazard to serve as financial advisor to the special committee of independent directors of CBS in connection with its evaluation of such a potential combination. On November 7, 2016, the special committee of independent directors of Viacom engaged Morgan Stanley, LionTree and a third investment bank that was not ultimately involved in the transaction to serve as financial advisors to the special committee of independent directors of Viacom in connection with its evaluation of such a potential combination. Following discussions between the companies and between NAI and each of the companies, on December 12, 2016, representatives of NAI requested that the CBS and Viacom boards of directors discontinue their discussions regarding a potential combination. On December 14, 2016 the CBS board of directors dissolved the special committee.

In November 2017, the independent directors of Viacom met with Morgan Stanley to review the state of the industry and potential strategic alternatives available to Viacom, including potential business combinations and other strategic transactions, as well as the possibility of Viacom remaining a separate, standalone company. Based on such review and in light of the current media industry landscape, including the increasing focus on scale and consolidation, the independent directors of Viacom concluded that a business combination, including a potential business combination of Viacom and CBS, continued to be strategically desirable.

In late January 2018, with NAI’s knowledge and support, the management and boards of directors of each of CBS and Viacom discussed the possibility of re-engaging in discussions regarding a potential combination. On January 31, 2018, Cleary Gottlieb Steen & Hamilton LLP (which we refer to as “Cleary”), legal counsel to NAI, sent a note on behalf of NAI to Cravath, Swaine & Moore LLP (which we refer to as “Cravath”), who would be acting as counsel to the special committee of the board of directors of Viacom, and another law firm that was not ultimately involved in this transaction but which previously acted as counsel to the special committee of the board of directors of CBS, stating that NAI was aware that each of the boards of directors of Viacom and CBS at that time were considering the formation of a special committee to consider a potential combination of the two companies and that (1) NAI believed the optimal structure would be an all-stock transaction in which the stockholders of each company would receive shares in the combined company of the same class as they held at

 

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the time; and (2) NAI would not be willing to accept or support an acquisition by a third party of either company or any transaction that would result in NAI surrendering its controlling position in either company or not controlling the combined company.

In February 2018, each of CBS and Viacom formed a special committee of independent directors to again evaluate a potential combination of CBS and Viacom. The special committee of independent directors of Viacom (which we refer to as the “Viacom special committee”), consisting of directors Thomas J. May, Judith McHale, Ronald Nelson and Nicole Seligman, and co-chaired by Mr. May and Ms. Seligman, was established on February 1, 2018 by the unanimous written consent of the Viacom board of directors. Pursuant to such written consent, the Viacom special committee was delegated the full and exclusive power and authority of the Viacom board of directors to the fullest extent permitted by law to, among other things, propose, review and evaluate and, if appropriate, negotiate the terms of a possible merger or business combination between Viacom and CBS (or any other strategic alternative actionable by Viacom that the Viacom special committee determines, in its sole discretion, to consider) and to make recommendations to the Viacom board of directors and to Viacom stockholders with respect thereto. Such written consent also provided that the Viacom board of directors would not recommend or otherwise approve any such possible transaction without a prior favorable recommendation thereof by the Viacom special committee. The Viacom special committee formally engaged Cravath as its legal counsel on February 5, 2018.

On February 6, 2018, the special committee of independent directors of CBS entered into a new engagement letter with Lazard, pursuant to which Lazard agreed to serve as financial advisor to the special committee in connection with its evaluation of a potential combination of CBS and Viacom. On March 6, 2018, the Viacom special committee entered into new engagement letters with Morgan Stanley and LionTree, pursuant to which Morgan Stanley and LionTree agreed to serve as financial advisors to the Viacom special committee in connection with its evaluation of a potential combination of CBS and Viacom. On March 15, 2018, following deliberations regarding the value of having two independent financial advisors, the special committee of independent directors of CBS engaged Centerview to serve, along with Lazard, as financial advisor to the special committee of independent directors of CBS in connection with its evaluation of a potential combination of the two companies. During February and March 2018, CBS and Viacom conducted due diligence on each other’s businesses. On March 29, 2018, representatives of CBS communicated to representatives of Viacom an offer to acquire Viacom at an exchange ratio of 0.55 of a share of CBS common stock per share of Viacom common stock. On April 4, 2018, following additional negotiations between the companies and their respective advisors, Viacom made a counterproposal that the proposed transaction be effected at an exchange ratio of 0.68 of a share of CBS common stock per share of Viacom common stock. After a series of discussions and proposals between representatives of CBS and Viacom, on April 22, 2018, the parties reached a preliminary agreement on an exchange ratio of 0.6135 of a share of CBS common stock per share of Viacom stock and the appointment of Les Moonves, then a director of CBS, Chairman of the CBS board of directors and President and Chief Executive Officer of CBS, as the combined company’s Chairman and Chief Executive Officer, subject to, among other things, the mutually satisfactory resolution of the board composition and governance of the combined company as well as other management composition. Neither NAI nor its representatives were involved in negotiations of the exchange ratio and from time to time, NAI’s representatives stated to representatives of CBS and Viacom that NAI was economically indifferent to the exchange ratio in the range being discussed given its percentage interest in the common stock of each of Viacom and CBS and the relative sizes of the two companies. As of April 22, 2018, there had been only limited progress made on management and board matters, with the parties having reached a preliminary consensus that Mr. Moonves serve as the combined company’s Chairman and Chief Executive Officer and no progress on governance matters. NAI had expressed that it would not at that time commit to conditioning a potential combination on the receipt of majority of the minority votes in light of the potential “hold up” value and related execution risks it could pose. On May 8, 2018, following deliberations, the special committee of independent directors of CBS advised the other independent directors of CBS of its determination that it was not in the best interests of CBS stockholders to merge with Viacom at such time.

 

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On May 14, 2018, CBS delivered notice of a meeting of the CBS board of directors to consider, among other things, a pro rata dividend of 0.5687 of a share of CBS Class A common stock for each share of CBS Class A common stock and CBS Class B common stock (conditioned on a final determination by the Court of Chancery of the State of Delaware that the dividend was permissible), the result of which would have been to dilute NAI’s voting interest in CBS from approximately 79% to approximately 20%, and CBS and the members of the special committee of independent directors of CBS filed a lawsuit in the Court of Chancery of the State of Delaware alleging that NAI intended to force a merger of CBS and Viacom in alleged violation of its fiduciary duties and seeking an injunction to prevent NAI from removing CBS directors until the CBS special committee and board of directors could vote on proposed resolutions to issue such pro rata dividend. On May 14, 2018, in response to the filing of the lawsuit, NAI announced publicly that it had no intention of replacing directors on the CBS board of directors or forcing a combination of CBS and Viacom that was not supported by both companies. On May 16, 2018, the NAI Parties delivered to CBS an action by written consent to effect certain amendments to the CBS bylaws, which amendments, among other things, put in place certain procedural requirements for the CBS board of directors to declare and pay any cash or stock dividend on the capital stock of CBS. On May 17, 2018, the members of the CBS board of directors not affiliated with NAI voted unanimously to declare such pro rata dividend. On May 23, 2018, CBS and the members of the special committee of independent directors of CBS filed an amended complaint in the Court of Chancery of the State of Delaware alleging that NAI, Ms. Redstone, Mr. Redstone and Mr. Redstone’s trust had breached their fiduciary duties and seeking declarations that the May 16, 2018 bylaw amendments were ineffective and such pro rata dividend was valid and permissible and seeking to enjoin NAI from taking action to change the composition of the CBS board of directors. On May 29, 2018, the NAI Parties and Ms. Redstone filed a complaint in the Court of Chancery of the State of Delaware against CBS and the members of the CBS board of directors who had approved such pro rata dividend, seeking declarations that the May 16, 2018 bylaw amendments were valid and effective and that such pro rata dividend was invalid, ineffective and void. The Viacom special committee determined to remain constituted in order to be kept apprised by its legal advisors of any developments in such litigation, as well as to be prepared in the event discussions of a potential combination were to resume.

On September 9, 2018, CBS, the NAI Parties and certain other persons entered into the Settlement Agreement pursuant to which all claims in the pending litigation were dismissed. Pursuant to the terms of the Settlement Agreement, seven members of the CBS board of directors voluntarily resigned and were replaced by six new members unanimously approved by the CBS board of directors in connection with the execution of the Settlement Agreement. The Settlement Agreement also provided, among other things, that the NAI Parties would (1) take action to ensure that the directors seated on the CBS board of directors immediately following the execution of the Settlement Agreement would continue to constitute the members of the CBS board of directors until at least the CBS 2020 annual meeting of stockholders and that the NAI Parties would not take action by written consent to remove any of such directors until after the CBS 2020 annual meeting of stockholders except upon the recommendation of at least 75% of the members of the CBS board of directors who were unaffiliated with NAI, (2) not propose, or consent to, a combination of CBS and Viacom prior to September 9, 2020 unless two-thirds of the members of the CBS board of directors who were unaffiliated with NAI have invited such proposal or approved such transaction, (3) give good faith consideration to any business combination transaction or other strategic alternative involving CBS that the members of the CBS board of directors who were unaffiliated with NAI determined may be in the best interests of CBS and (4) not take any action that would result in the CBS board of directors being comprised of less than a majority of directors who were unaffiliated with NAI or independent under the rules of the NYSE and the SEC. The terms of the Settlement Agreement did not preclude Viacom or CBS from proposing a potential transaction between CBS and Viacom. In addition, pursuant to the Settlement Agreement, NAI, in its capacity as the majority voting stockholder of CBS, took action by written consent to amend the CBS bylaws to remove the procedural requirements previously put in place by NAI with respect to the declaration and payment of dividends by the CBS board of directors on the capital stock of CBS, and the CBS board of directors unanimously adopted resolutions to rescind the pro rata dividend declared by resolution of the CBS board of directors on May 17, 2018.

 

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Also on September 9, 2018, pursuant to a separation agreement, Mr. Moonves resigned as a director of CBS, Chairman of the CBS board of directors and President and Chief Executive Officer of CBS. Effective upon Mr. Moonves’ departure, Joseph R. Ianniello, then Chief Operating Officer of CBS, was appointed President and Acting Chief Executive Officer of CBS, while the CBS board of directors commenced a search for a new chief executive officer in which the CBS board of directors considered several candidates for the permanent position in addition to Mr. Ianniello.

Following Mr. Ianniello’s appointment as President and acting CEO of CBS, Mr. Ianniello met with Ms. Redstone to discuss his transition. During the meeting, Mr. Ianniello expressed his view that there were benefits to a potential business combination of CBS and Viacom. Ms. Redstone conveyed that she could not engage in discussions concerning any potential business combination between CBS and Viacom outside of the terms set forth in the Settlement Agreement and that any such discussion should go through the appropriate board process.

Between September 2018 and November 2018, the CBS board of directors met four times with the senior management of all of CBS’ divisions to conduct a comprehensive review of its operations and its industries. These meetings were intended to provide the CBS board of directors (including the members of the CBS board of directors who were appointed in September 2018) with a detailed understanding of the CBS businesses and their positioning in their respective industries. These meetings included presentations about CBS Television Studios, CBS Interactive, Showtime Networks, CBS Entertainment, CBS Sports, CBS News, CBS Television Stations, advertising, affiliate and subscription fees, content licensing and distribution and Simon & Schuster. The presentations addressed, among other things, current operations and opportunities available to such businesses and challenges for the future. The meetings did not include a review of strategic alternatives.

In conjunction with these meetings, the CBS board of directors also asked Mr. Ianniello and Christina Spade, Executive Vice President, Chief Financial Officer of CBS, to prepare a long-range business plan for CBS as a standalone entity. On January 22, 2019, representatives of CBS management presented a long-range business plan for CBS as a standalone entity to the CBS board of directors, and members of the CBS board of directors and representatives of CBS management engaged in an in-depth discussion of such plan. The CBS board of directors subsequently approved the first year of the plan as the CBS budget for 2019 on January 31, 2019.

On January 31, 2019, the CBS board of directors met with representatives of CBS management and representatives of Centerview and Lazard (each of which had previously been engaged as a financial advisor to the prior special committee of independent directors of CBS in connection with the previous discussions regarding a potential business combination of CBS and Viacom) in order to hear the views of representatives of Centerview and Lazard of the evolving media industry landscape and the anticipated trends in media industry consolidation, as well as any potential insights they had based on their prior representation of CBS.

On February 21, 2019 and March 9, 2019, members of the CBS board of directors, other than Ms. Redstone and Robert N. Klieger, met with representatives of Centerview and Lazard and CBS management to conduct a thorough review of the rapidly evolving media landscape and strategic alternatives for CBS, including specific potential acquisition or merger opportunities within the media industry. Based on such review and the advice of representatives of Centerview and Lazard as well as the presentation of CBS management’s views of the industrial logic of a potential business combination of CBS and Viacom, the members of the CBS board of directors present at the meeting agreed that a potential combination between CBS and Viacom could have strategic merit. The members of the CBS board of directors present at the meeting agreed to further evaluate such a potential business combination with Viacom while continuing to monitor other potential acquisition or merger opportunities within the media industry. The CBS board of directors determined that the evaluation of a potential business combination with Viacom would not preclude the CBS board of directors from evaluating other potential acquisition or sale alternatives of CBS.

On March 22, 2019, the members of the CBS board of directors who were deemed to be independent and not affiliated with NAI (Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian M. Goldner, Linda

 

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M. Griego, Martha L. Minow, Susan Schuman, Frederick O. Terrell and Strauss Zelnick) (whom we refer to as the “non-NAI affiliated independent CBS directors”) held a meeting at which representatives of Paul, Weiss, Rifkind, Wharton & Garrison LLP (which we refer to as “Paul Weiss”), which had been engaged on March 9, 2019 as legal counsel to the non-NAI affiliated independent CBS directors, were present. The non-NAI affiliated independent CBS directors discussed a possible business combination transaction between CBS and Viacom. The non-NAI affiliated independent CBS directors and representatives of Paul Weiss also discussed their understanding of NAI’s likely desire to combine CBS and Viacom in view of NAI’s public acknowledgement of its support for CBS and Viacom to consider such a transaction prior to entering into the Settlement Agreement and whether the completion of such a potential business combination should be conditioned on the receipt of a vote of a majority of CBS stockholders unaffiliated with NAI (which we refer to as the “majority of the minority vote”). During the course of such discussion, the non-NAI affiliated independent CBS directors deliberated regarding the majority of the minority vote condition and discussed, among other things, the holders of shares of CBS common stock that would be eligible to vote in a majority of the minority vote, uncertainty as to how such a vote should be structured in light of CBS’ dual-class structure with non-voting stock and the heightened execution risk that would arise from a majority of the minority vote condition, including the risk that certain minority investors could exploit “hold-up” value or seek to have deal terms renegotiated. The non-NAI affiliated independent CBS directors also determined that, in the event that a special committee of CBS directors were to be formed to further consider a potential transaction with Viacom, Ms. Beinecke should be designated to interface with such committee’s legal advisors and Ms. Byrne and Mr. Terrell should be designated to interface with such committee’s financial advisors, in each case, more frequently than would be practicable for the entire committee to meet, in order to, among other things, provide guidance to the legal and financial advisors.

On March 25, 2019, following a request by the non-NAI affiliated independent CBS directors that Mr. Ianniello meet Ms. Redstone to discuss the future of CBS and the industrial logic of a potential combination of CBS and Viacom, an overview of which Mr. Ianniello had provided to the non-NAI affiliated independent CBS directors on March 9, 2019, Mr. Ianniello met with Ms. Redstone. During the meeting, Mr. Ianniello expressed his view that there were benefits to a potential transaction involving CBS and Viacom.

In March 2019, representatives of Cleary separately contacted representatives of Paul Weiss and Cravath to discuss the possible business combination between CBS and Viacom that they understood was under consideration by the two companies. During the course of such discussions, representatives of Paul Weiss indicated to representatives of Cleary that the non-NAI affiliated independent CBS directors were considering whether to condition such a potential combination on the receipt of a majority of the minority vote. Representatives of Cleary subsequently indicated to representatives of Cravath that due to the restrictions imposed by the Settlement Agreement, NAI was not permitted at that time to propose or agree to any potential business combination between CBS and Viacom and therefore was not in a position to express a view as to whether any such potential combination should be conditioned on the receipt of a majority of the minority vote. However, representatives from Cleary did advise representatives of Paul Weiss (and remind representatives of Cravath) that NAI had not been willing to commit to such a condition in the prior discussions in 2016 and 2018.

On April 4, 2019, the non-NAI affiliated independent CBS directors held a meeting at which representatives of CBS management, Centerview, Lazard and Paul Weiss were present for all or part of the meeting to discuss potential strategic alternatives involving CBS, including remaining as a standalone company and a potential transaction with Viacom. At the meeting, the representatives of Centerview and Lazard discussed potential sale transactions involving various counterparties and noted their respective views that it was unlikely that a prospective acquirer would be interested in acquiring CBS at the present time because of the fact that (1) each potential acquirer in the media or entertainment industry that would potentially be capable of acquiring CBS was either currently focused on integrating recently acquired businesses or had demonstrated (or otherwise expressed) a preference to expand offerings organically rather than through acquisitions and (2) any transaction with a prospective acquirer would likely be subject to significant regulatory scrutiny. The non-NAI affiliated independent CBS directors also considered whether CBS would be advantaged by delaying discussions with Viacom until a later point in time given the limited ability of other potential counterparties to enter into a

 

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potential transaction with CBS at the present time, and following deliberations, determined not to delay such discussions. The non-NAI affiliated independent CBS directors discussed among themselves the merits of such a business combination with Viacom, particularly in light of the current media industry landscape and the increasing focus on scale and consolidation among CBS’ key competitors, strategic optionality, the potential for enhanced content offerings on an international platform and other potential synergies. The non-NAI affiliated independent CBS directors also discussed potential acquisitions, but after reviewing potential strategic alternatives with representatives of Centerview and Lazard, determined that pursuing a transaction with Viacom would not preclude the CBS board of directors from evaluating other acquisition or sale alternatives, few of which would have the same scale as Viacom. Accordingly, the non-NAI affiliated independent CBS directors determined to further consider a potential transaction with Viacom. The non-NAI affiliated independent CBS directors then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On April 7, 2019, the non-NAI affiliated independent CBS directors held a meeting at which representatives of Paul Weiss were present to discuss the formation of a special committee to further consider a potential transaction with Viacom. At the meeting, the non-NAI affiliated independent CBS directors discussed the independence of each of the CBS directors and reviewed the potential conflicts of such directors relating to a potential transaction involving CBS, Viacom and NAI. The non-NAI affiliated independent CBS directors then resolved to recommend to the CBS board of directors that a special committee of the CBS board of directors (which we refer to as the “CBS special committee”) be formed for the purpose of considering a transaction with Viacom and recommended that the membership of the CBS special committee consist of Mses. Beinecke, Byrne, Griego, Minow and Schuman and Messrs. Countryman, Goldner and Terrell.

Also on April 7, 2019, the CBS board of directors held a telephonic meeting at which representatives of CBS management and Paul Weiss were present. At the meeting, the CBS board of directors discussed forming the CBS special committee as recommended by the non-NAI affiliated independent CBS directors. On April 9, 2019, the members of the CBS board of directors executed a unanimous written consent forming the CBS special committee for the purpose of considering a transaction with Viacom with Mses. Beinecke, Byrne, Griego, Minow and Schuman and Messrs. Countryman, Goldner and Terrell as members. Pursuant to the unanimous written consent, the CBS board of directors authorized the CBS special committee to review and participate in negotiations related to the transaction and to determine whether such a transaction was advisable and in the best interests of CBS and all of its stockholders (in their capacity as such) (including those unaffiliated with NAI). The CBS board of directors also resolved that the CBS board of directors would not approve a business combination transaction with Viacom unless the CBS special committee recommended a business combination transaction with Viacom. The CBS special committee was also empowered to determine, at any time, not to pursue the potential transaction with Viacom and to terminate CBS’ consideration thereof. The CBS special committee also formally engaged Paul Weiss, which had previously been engaged as legal counsel to the non-NAI affiliated independent CBS directors, as its independent legal counsel.

On April 10, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management and Paul Weiss in attendance. At the meeting, representatives of Paul Weiss discussed with the CBS special committee certain legal and governance considerations and protocols relating to the CBS special committee’s consideration of a potential business combination between CBS and Viacom. After reviewing the potential strategic alternatives of CBS with representatives of Centerview and Lazard, the members of the CBS special committee agreed that no other transaction would likely constitute a viable and more attractive alternative to a potential business combination with Viacom and that exploring a business combination with Viacom would be in the best interests of CBS and its stockholders. Following such discussion, the CBS special committee authorized Mr. Ianniello to initiate a discussion with Mr. Bakish to explore such a potential business combination.

On April 11, 2019, Messrs. Bakish and Ianniello discussed a potential transaction involving CBS and Viacom, and agreed that the financial advisors and legal counsels to the CBS special committee and the Viacom

 

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special committee should engage in further discussions to consider potential terms for a transaction and to conduct due diligence.

On April 15, 2019, the Viacom special committee, which had remained constituted since its formation in February 2018, held a telephonic meeting with representatives of Viacom management and Cravath in attendance for all or part of the meeting. The Viacom special committee discussed with representatives of management and Cravath the recent discussions that had taken place between Mr. Bakish and Mr. Ianniello, as well as the strategic merits of a potential combination of CBS and Viacom. The Viacom special committee remained of the view that a potential combination of CBS and Viacom continued to present a compelling opportunity in light of the changing dynamics in the media industry as compared with other potential alternatives available to Viacom, including remaining as a separate, standalone company. Representatives of Cravath reviewed with the Viacom special committee the legal and process considerations that they had followed in the prior round of discussions with CBS. The Viacom special committee and representatives of Viacom management also discussed next steps, including Viacom management’s proposed process for due diligence and for completing the Viacom management forecasts. The Viacom special committee also discussed re-engaging Morgan Stanley and LionTree as its financial advisors and, following such discussion, determined to engage each of them, subject to the negotiation of mutually acceptable terms of engagement.

On April 17, 2019, to facilitate further discussions and evaluation by each company of such a transaction, CBS and Viacom entered into a nondisclosure agreement.

On April 18, 2019, the Viacom board of directors held a telephonic meeting with representatives of Viacom management in attendance. The representatives of Viacom management reviewed with the Viacom board of directors certain Viacom management forecasts (described under “—Certain Viacom Unaudited Prospective Financial Information”), which had been prepared by updating the Viacom long range plan that had been used in connection with the prior year’s discussions with CBS.

On April 23, 2019, after an eight-month search, CBS announced the suspension of its search for a new chief executive officer. At the same time, CBS entered into a letter agreement with Mr. Ianniello, pursuant to which Mr. Ianniello’s employment as President and Acting Chief Executive Officer of CBS was extended through the end of 2019 (or, in certain cases if requested by the CBS board of directors, until the end of the first quarter of 2020). Prior to the letter agreement, Mr. Ianniello had the right to terminate his employment with good reason if he was not named permanent chief executive officer by June 30, 2019. The letter agreement extended this date to the end of the year for the purposes of continuity and stability of CBS operations for a longer period of time and to give the CBS special committee additional time to consider a potential combination with Viacom.

On April 24, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. The representatives of Viacom management provided an update on a meeting scheduled to be held between representatives of Viacom and CBS to, among other things, present each party’s financial projections and reviewed with the Viacom special committee the Viacom management forecasts that had been updated and finalized since the prior meeting of the Viacom board of directors. The participants in attendance discussed the risks related to meeting the Viacom management forecasts, including (1) that Viacom management’s ordinary practice was to produce a one-year budget and that management had only undertaken to produce a five-year forecast in connection with the prior year’s discussions with CBS and, as a result, Viacom’s ability to achieve the outcomes in the later years of the Viacom management forecasts, which were inherently more speculative, were largely unproven and (2) Viacom management’s view that such forecasts were aggressive but a realistic best case scenario. Following discussion, the Viacom special committee authorized the Viacom management forecasts described under “—Certain Viacom Unaudited Prospective Financial Information” to be shared with representatives of CBS management at the upcoming meeting scheduled for April 26, 2019.

On April 26, 2019, a management presentation meeting was held, at which representatives of CBS and Viacom and representatives of each special committee’s financial and legal advisors were present. At the

 

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meeting, representatives of CBS and Viacom discussed, among other things, each company’s long-term outlook, financial projections, areas for growth and viewership trends across different operating segments. Following this meeting, each of CBS and Viacom made available to representatives of the other party due diligence materials in an electronic data room and thereafter through the date of the merger agreement, representatives of CBS and Viacom and advisors to the respective special committees each engaged in a due diligence review of the other company.

Following the management presentations on April 26, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance, during which it received an update on the meeting that had taken place earlier that day.

On May 6, 2019, NAI executed a joinder to the nondisclosure agreement between CBS and Viacom in order to permit its review of confidential information about each of CBS and Viacom.

On May 9, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. Representatives of Viacom management (1) provided an update on their ongoing due diligence review of CBS and summarized for the Viacom special committee their findings to date, (2) provided an overview of the CBS management forecasts that had been shared with Viacom during the meeting between representatives of Viacom and CBS management on April 26, 2019, and (3) outlined their preliminary view on synergies achievable in a potential transaction with CBS. At the conclusion of such meeting, the Viacom special committee entered into executive session with representatives of Cravath present, during which representatives of Cravath described the material terms of the engagement letters negotiated with Morgan Stanley and LionTree. Following a discussion of such terms, the Viacom special committee unanimously authorized the execution of the proposed engagement letters.

On May 10, 2019, the respective senior management teams of CBS and Viacom met to discuss potential synergies that could be achieved in connection with the proposed business combination between CBS and Viacom.

Later on May 10, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance, during which it received an update on the meeting held between the respective senior management teams of CBS and Viacom that had taken place earlier that day.

On May 15, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance, during which it received an update on the discussions that its financial advisors had with the financial advisors of the CBS special committee in the days prior to discuss the status of the transaction process. In addition, representatives of Viacom management provided the Viacom special committee with an update on the due diligence process and the ongoing work with respect to estimating the synergies achievable in a potential transaction with CBS.

On May 22, 2019, the Viacom special committee held an in-person meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. At such meeting, representatives of Viacom management presented their findings from its due diligence review of CBS, including their view on the CBS management forecasts and their view on the estimated synergies achievable in a potential transaction with CBS. The participants also discussed recent press coverage regarding a potential acquisition by CBS of another company in the industry (which we refer to as “Company A”) and the impact such transaction would have on a potential transaction between CBS and Viacom. At the conclusion of such meeting, the Viacom special committee entered into executive session with representatives of Cravath present, during which the special committee discussed with representatives of Cravath, among other things, whether to condition the transaction on a majority of the minority vote, the risk that such a condition would invite arbitrage investors to exploit “hold up” value that would either create execution risk that would not be in the best interests of all

 

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stockholders, or that such activity could result in a renegotiation of an agreed upon exchange ratio to the detriment of Viacom stockholders, and that NAI had not committed to such a condition in the prior discussions in 2016 and 2018. The Viacom special committee determined that it would continue to consider whether such a condition would be beneficial or detrimental to Viacom stockholders.

On May 23, 2019, representatives of Centerview, Lazard, Morgan Stanley and LionTree met to discuss CBS’ and Viacom’s respective views on the synergies that could be achieved in connection with the proposed business combination between CBS and Viacom. Also on May 23, 2019, representatives of Morgan Stanley and Lazard discussed the rumored potential transaction between CBS and Company A.

Later on May 23, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. At such meeting, representatives of Morgan Stanley and LionTree provided an update regarding the meeting with the financial advisors of the CBS special committee held earlier that day.

On May 29, 2019, the CBS special committee held an in-person meeting at which representatives of CBS management, Centerview, Lazard and Paul Weiss were present for all or part of the meeting. At the meeting, the representatives of CBS management presented their due diligence findings, including an overview of Viacom’s business structure and revenue drivers. The representatives of CBS management also presented their views of Viacom management projections, including how such projections compared to a consensus view of Viacom’s future performance and their expectation that Viacom’s projections would need to be adjusted downward in connection with their evaluation of a potential business combination, as further described in the section entitled “—Certain CBS Prospective Financial Information”, and a preliminary analysis of a potential business combination, including potential cost synergies, revenue synergies and other opportunities presented by a potential business combination, the pro forma revenue and operating income after giving effect to the potential transaction and the anticipated impact of the potential transaction on CBS’ earnings per share and balance sheet. During their presentation, the representatives of CBS management indicated that they believed Viacom held valuable assets that would benefit CBS if a business combination were to be consummated. The CBS special committee discussed these topics, as well as other governance and management matters relating to a potential business combination with Viacom, with representatives of CBS management. Representatives of CBS management also discussed with the CBS special committee their reasons for supporting a potential transaction with Viacom on appropriate terms, including (1) the scale and financial resources of the combined company, which would encourage innovation and enhance CBS’ ability to compete in the current media industry landscape, and (2) the powerful consumer brands and sizeable library of premium television and film franchises that would be available to the combined company and related cross-platform and direct-to-consumer opportunities. Following such discussions, the CBS special committee met in executive session to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On May 31, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance, during which representatives of management provided their views on the strategic merits of, and representatives of Morgan Stanley and LionTree provided their respective preliminary financial analyses of, the proposed business combination between CBS and Viacom. The Viacom special committee took note of the fact that the discounted cash flow valuations of Viacom derived from the Viacom management forecasts were well in excess of Viacom’s current market valuation, and discussed the potential reasons for the disparity with its financial advisors. Representatives of Morgan Stanley and LionTree advised that such valuations were significantly affected by terminal years and thus significantly weighted by the outer years of the Viacom management forecasts, which representatives of Viacom management had previously indicated were aggressive but a realistic best case scenario. Following a discussion on such analyses, the Viacom special committee requested that representatives of Viacom management provide further perspective on the achievability of the Viacom management forecasts at a future meeting. In connection with such presentation, the Viacom special committee also discussed with its financial and legal advisors the discrepancy in the trading prices between the Viacom Class A common stock and the Viacom Class B common

 

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stock, and whether such discrepancy should be reflected in a negotiated exchange ratio with CBS. Following such discussion, the Viacom special committee directed its legal and financial advisors to further analyze the issue. At such meeting, the participants also discussed a number of other matters, including (1) the potential transaction between CBS and Company A and (2) negotiation strategy with respect to the exchange ratio.

On June 6, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, representatives of Centerview and Lazard presented their preliminary financial analysis of the proposed business combination between CBS and Viacom, including a discussion of the standalone and relative valuations of CBS and Viacom and the range of market-implied exchange ratios based on such valuations, the pro forma valuation of the combined company and CBS management’s current views of potential cost and revenue synergies to be realized from the potential transaction. In connection with such presentation, representatives of Centerview and Lazard and the CBS special committee discussed certain considerations relating to the relative performance of the Class A common stock of CBS and Viacom relative to the Class B common stock of CBS and Viacom, respectively.

On June 7, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting, to follow up on matters discussed at the prior meeting of the Viacom special committee. Representatives of Viacom management discussed the achievability of the Viacom management forecasts, noting that they provided an optimistic view of Viacom’s future and, while reflective of Viacom’s potential, were subject to a number of industry and execution risks and represented an aggressive but realistic best case scenario. The Viacom special committee discussed with its financial advisors ways to view the outer years, which were inherently more speculative, including preparing different cases or sensitivities to the Viacom management forecasts, relying on consensus analyst estimates (which were more conservative in the outer years), and using a mix of the Viacom management forecasts and consensus analyst estimates. Following such discussion, the Viacom special committee determined it would continue to consider the matter and come to a view as to how to view the Viacom management forecasts in advance of any exchange ratio negotiations.

On June 12, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, the CBS special committee and representatives of Paul Weiss discussed various legal and governance matters in connection with a potential transaction between CBS and Viacom, including matters related to transaction structure, the exchange ratio, the initial composition of the board of directors of the combined company (which we refer to as the “combined company board of directors”) and the senior management team of the combined company, transaction documentation and certain governance protections, including the possibility of preserving certain provisions set forth in the Settlement Agreement. The CBS special committee and representatives of Paul Weiss then discussed the considerations for determining whether to condition the completion of a potential transaction on receipt of a majority of the minority vote, including the non-voting nature of the CBS Class B common stock, the associated uncertainty as to how a majority of the minority vote would be structured in light of CBS’ capital structure and the concentration of ownership of CBS Class A common stock, the heightened execution risk that may arise as a result of merger arbitrage as well as that NAI had not committed to such a condition in the prior discussions in 2016 and 2018 and the CBS special committee’s belief that NAI would not be willing to agree to such a condition in connection with the current proposed transaction. Following a detailed discussion with representatives of Paul Weiss regarding the foregoing considerations, the CBS special committee determined not to seek to condition the completion of a potential transaction on receipt of a majority of the minority vote. The CBS special committee and representatives of CBS management also discussed the potential business strategy for the combined company, including potential areas for growth and allocation of resources across different business segments of the combined company if a potential transaction were to be consummated.

On June 13, 2019, representatives of Cravath and Paul Weiss discussed a number of legal considerations related to the potential transaction, including with respect to deal protection, seeking a voting agreement from NAI and a majority of the minority vote. Also on June 13, 2019, representatives of Cravath and Cleary separately discussed a number of legal considerations, including with respect to seeking a voting agreement from NAI.

 

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In addition, throughout the process and with the knowledge of the relevant special committee, members of each of the Viacom special committee and the CBS special committee and the financial advisors to the special committees had conversations with representatives of NAI, and representatives of each of Cravath and Paul Weiss had conversations with representatives of Cleary and representatives of each of LionTree and Morgan Stanley had conversations with representatives of Lazard, with respect to management and governance of the combined company. During such conversations such representatives expressed NAI’s views on such management and governance matters. Although at times such conversations involved updates to NAI and its representatives on the status of the exchange ratio negotiations taking place between the special committees and their advisors, neither NAI nor its representatives participated in such negotiations. NAI did state from time to time to members of the special committee of each of CBS and Viacom that NAI believed that the exchange ratio should be fair to the stockholders of both companies. NAI’s representatives also stated from time to time to representatives of the special committees of each of CBS and Viacom that NAI was economically indifferent to the exchange ratio in the range being discussed given its percentage interest in the common stock of each of Viacom and CBS and the relative sizes of the two companies. In addition, from time to time, various members of the Viacom and CBS boards of directors who were not affiliated with NAI and were not serving on either special committee, including Charles E. Phillips, Jr. in the case of Viacom and Strauss Zelnick in the case of CBS, also had communications with members of the special committees, the financial advisors to the special committees, members of the other company’s board of directors and/or representatives of NAI to discuss issues related to management and governance of the combined company.

On June 14, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. At such meeting, representatives of Morgan Stanley and LionTree reviewed precedent transactions during the prior two decades involving targets with share classes having unequal voting rights, noting among other things that the financial advisors had not found any transactions in which high-vote stockholders retained control while also receiving a premium for their shares in comparison to low- or no-vote stockholders. The Viacom special committee discussed the implications of the trading price differential between Viacom Class A and Class B common stock with representatives of Morgan Stanley, LionTree and Cravath. Following such discussion, the Viacom special committee determined that, pending its financial advisors providing further information in response to questions raised by the Viacom special committee, it would not seek to negotiate differential consideration for holders of Viacom Class A common stock in light of, among other things, the findings of its financial advisors and the facts that (1) all of the Viacom common stock is accorded equal economic rights under the Viacom charter, (2) the contemplated transactions would result in holders of Viacom Class A common stock continuing to hold voting stock in the combined company and would maintain the differential voting rights between the two classes of stock, including maintaining the current control dynamics, with NAI (and not the other holders of Viacom Class A common stock) continuing to control the combined company and (3) a differential exchange ratio would take value from non-voting Viacom stockholders to benefit the voting Viacom stockholders, which would predominantly benefit NAI. In addition, representatives of LionTree briefed the Viacom special committee on the discussions such representatives had with representatives from Centerview earlier in the week. At the conclusion of the meeting, the Viacom special committee entered into executive session with representatives of Cravath present, during which the participants discussed how to view the Viacom management forecasts and whether to direct Morgan Stanley and LionTree to use, for purposes of analyzing and opining on the fairness of the consideration in a potential transaction with CBS, the Viacom management forecasts, consensus analyst estimates or a combination of both. Following such discussions, the Viacom special committee determined to direct its financial advisors to use both the Viacom management forecasts and the consensus analyst estimates, with greater weight given to consensus analyst estimates for the reasons discussed at the prior meeting of the Viacom special committee, including (1) that Viacom’s ability to achieve the outcomes in the later years of the Viacom management forecasts, which were inherently more speculative, were largely unproven and (2) Viacom management’s view that such forecasts were aggressive but a realistic best case scenario. The Viacom special committee also determined that the CBS management forecasts were likely to be subject to similar considerations, and in order to look at the companies on a comparable basis, directed

 

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Morgan Stanley and LionTree to use both the CBS management forecasts and the consensus analyst estimates, with greater weight similarly being given to consensus analyst estimates.

Also on June 14, 2019, the CBS special committee held a meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss present for all or part of the meeting. At the meeting, the CBS special committee and representatives of Centerview, Lazard and Paul Weiss discussed the potential range of exchange ratios and the potential management and governance terms of a potential transaction, particularly with respect to Messrs. Bakish’s and Ianniello’s potential roles at the combined company in light of, among other things, CBS’ strong performance under Mr. Ianniello’s leadership, as well as their understanding that NAI would have a strong preference for appointing Mr. Bakish as the chief executive officer of the combined company because of, among other things, the improvements at Viacom under his leadership. Following a detailed discussion of the applicable considerations, the CBS special committee determined that it would be willing to agree that Mr. Bakish would serve as the chief executive officer of the combined company, subject to (1) the CBS special committee meeting with Mr. Bakish to discuss his vision for the combined company and confirming that they believed he would be an effective chief executive officer of the combined company, (2) Mr. Ianniello having a significant executive role at the combined company for a specified period of time following the closing and (3) reaching an agreement with Viacom on other open transaction terms. The CBS special committee and representatives of CBS management also discussed a potential transaction pursuant to which CBS would acquire Company A, and concluded that a transaction with Company A should not be considered as an alternative to a potential transaction with Viacom but rather as either a potential supplement to the potential transaction with Viacom given the relative sizes and independent strategic considerations for each of the two potential transactions, or as a standalone transaction in the event that a potential transaction with Viacom was not completed. The CBS special committee requested that Ms. Byrne communicate to Ms. Redstone the CBS special committee’s views with respect to, and timeline for evaluating, a potential transaction between CBS and Viacom, including with respect to the potential leadership of the combined company. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management, including the role of Mr. Ianniello and other key executives of CBS in the combined company.

On June 16, 2019, Ms. Byrne contacted Ms. Redstone to provide an update regarding the CBS special committee’s evaluation of a potential transaction between CBS and Viacom. During this conversation, Ms. Redstone expressed her strong preference for appointing Mr. Bakish as the chief executive officer of the combined company. In response, Ms. Byrne indicated that the CBS special committee would be willing to consider appointing Mr. Bakish as the chief executive officer so long as Mr. Ianniello would also be provided a significant executive role at the combined company for a specified period of time following the closing, based on the CBS special committee’s belief in the importance of retaining Mr. Ianniello in a key leadership position at the combined company for a specified period of time following the closing in order to help enhance the value of the combined company’s CBS assets, and subject to the other conditions discussed during the meeting of the CBS special committee held on June 14, 2019. Ms. Redstone indicated to Ms. Byrne that NAI would consider the CBS special committee’s position.

On June 19, 2019, representatives of Centerview, Lazard and Paul Weiss met with representatives of LionTree, Morgan Stanley and Cravath to discuss a potential transaction between CBS and Viacom. At the meeting, representatives of Centerview and Lazard stated that the CBS special committee would expect to negotiate the potential governance structure and management of the combined company prior to entering into a discussion regarding the exchange ratio in such a transaction. The participants discussed these topics, including the CBS special committee’s willingness to consider appointing Mr. Bakish as the chief executive officer of the combined company, subject to Mr. Ianniello having a significant management role in the combined company. In addition, representatives of Paul Weiss indicated that the CBS special committee’s view was that certain provisions set forth in the Settlement Agreement would need to be preserved following the closing of a potential transaction. During the meeting, the participants also discussed the exchange ratio. At the direction of the Viacom special committee, representatives of LionTree and Morgan Stanley indicated that the view of the

 

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Viacom special committee was that the exchange ratio of 0.6135 of a share of CBS common stock per share of Viacom common stock was the “agreed upon” exchange ratio from prior negotiations between CBS and Viacom in 2018, and that such amount should be the floor for future negotiations regarding the exchange ratio. In response, representatives of Centerview and Lazard indicated that the CBS special committee did not view the exchange ratio as having been agreed to, as evidenced by the termination of negotiations in 2018, and that it was the view of the CBS special committee that any such tentative “agreement” in 2018 would be irrelevant to the current negotiations in light of, among other things, changes in the market since the 2018 negotiations were terminated and differences in the proposed governance terms of the currently proposed transaction as compared with the proposed governance terms in the transaction proposed in 2018, as to which the parties had only reached preliminary consensus on Mr. Moonves serving as the combined company’s Chairman and Chief Executive Officer. Representatives of Centerview and Lazard further indicated that it was the view of the CBS special committee that the exchange ratio should ultimately be “at-or-near market.” The participants did not seek to reach an agreement regarding the exchange ratio to be used in the potential transaction during this meeting and decided to first determine whether they could align on the non-financial terms of a potential transaction before negotiating the exchange ratio.

Later on June 19, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting, during which representatives of Morgan Stanley, LionTree and Cravath provided an update regarding the meeting held with Paul Weiss, Centerview and Lazard earlier that day. In addition, representatives of Morgan Stanley and LionTree followed up on questions raised at the prior meeting of the Viacom special committee in respect of precedent transactions involving target share classes with unequal voting rights. Following discussion, the Viacom special committee determined that the additional information provided by Morgan Stanley and LionTree confirmed and did not change its prior determination not to seek differential consideration for the Viacom Class A common stock for the reasons previously discussed by the Viacom special committee. After further discussion, the Viacom special committee unanimously authorized Cravath to share the draft merger agreement it had prepared with Paul Weiss. Lastly, Mr. Bakish informed the Viacom special committee that he was scheduled to meet with Mr. Ianniello on June 24, 2019 to discuss their respective strategic visions for the combined company, including with respect to how to combine the management teams of the two companies.

On June 20, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received updates from Ms. Byrne regarding her conversations with Ms. Redstone on June 16, 2019 and from representatives of Centerview, Lazard and Paul Weiss regarding the meeting held on June 19, 2019 with LionTree, Morgan Stanley and Cravath. The CBS special committee also discussed a meeting between Messrs. Bakish and Ianniello scheduled to be held on June 24, 2019 for Messrs. Bakish and Ianniello to discuss their respective views on how to combine the management teams of the two companies and achieve the strategic benefits of a merger. The CBS special committee then discussed the advantages and disadvantages of various potential leadership structures for the two companies, once combined, and acknowledged that unless it was willing to enter into a potential transaction in which Mr. Bakish would be appointed the chief executive officer of the combined company, further progress on a deal would be unlikely. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Also on June 20, 2019, representatives of Cravath and Paul Weiss further discussed the governance and management terms of a potential transaction. Later that evening, representatives of Cravath sent an initial draft of the merger agreement to representatives of Paul Weiss.

On June 24, 2019, Messrs. Bakish and Ianniello met to discuss their respective visions and strategies for the combined company, as well as their respective views on the operating units and management of the combined company. During the meeting, Mr. Ianniello acknowledged that the CBS special committee was considering whether to agree that Mr. Bakish would serve as the chief executive officer of the combined company, and

 

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Messrs. Bakish and Ianniello discussed the scope of Mr. Ianniello’s role in the combined company. In addition, Messrs. Bakish and Ianniello discussed the timing for a potential transaction between the parties, CBS’ rumored interest in a potential transaction with Company A and the open matters that would need to be resolved by the parties’ respective special committees.

Later on June 24, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance, during which Mr. Bakish provided an update regarding his meeting with Mr. Ianniello earlier that day. In addition, representatives of Cravath provided an update regarding their discussion with representatives of Paul Weiss on June 20, 2019.

Also on June 24, 2019, representatives of Cleary separately contacted representatives of each of Paul Weiss and Cravath to request an update on the discussions between representatives of CBS and representatives of Viacom. Representatives of Paul Weiss indicated to representatives of Cleary that there were certain governance terms with respect to the potential transaction that would need to be discussed among the CBS special committee, the Viacom special committee and NAI, including with respect to the composition of the board of directors and the senior management team of the combined company.

On June 26, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received updates from Mr. Ianniello regarding his meeting with Mr. Bakish on June 24, 2019 and from representatives of Paul Weiss regarding the proposed terms of the merger agreement as set forth in the initial draft received from Cravath on June 20, 2019. The CBS special committee and representatives of CBS management, Centerview, Lazard and Paul Weiss discussed the potential governance terms of a potential transaction between CBS and Viacom, as well as potential senior management and operational teams of the combined company, including NAI’s positions with respect to senior management. Following such discussion, the CBS special committee determined to schedule a meeting between certain representatives of the CBS special committee and Mr. Bakish in order for the CBS special committee to enhance its understanding of Mr. Bakish’s vision and proposed strategy and business plan for the combined company. The CBS special committee also received an update from Ms. Byrne who informed the CBS special committee that she had been contacted by Ms. Redstone to express her views regarding the senior management team of the combined company. Representatives of CBS management, Centerview and Lazard then left the meeting and the CBS special committee met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On June 27, 2019, representatives of Centerview and Lazard provided representatives of Morgan Stanley and LionTree with an update on the CBS special committee’s process and plan for continued negotiations. Representatives of Centerview and Lazard stated that the CBS special committee wanted to schedule, in the coming weeks, an informal meeting between a subset of the members of the CBS special committee and Mr. Bakish and, following that, a meeting between the full CBS special committee and Mr. Bakish. In addition, representatives of Centerview and Lazard noted that representatives of Paul Weiss were in the process of preparing draft governance documentation that would be shared with representatives of Cravath following sign-off from the CBS special committee. Representatives of LionTree and Morgan Stanley promptly communicated such updates to the Viacom special committee.

On June 27 and June 28, 2019, Messrs. Bakish and Ianniello continued their discussion with respect to the organization of the combined company, integration of the different business segments of the two companies and the composition of the senior management team of the combined company.

Also on June 28, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received an update from Mr. Ianniello regarding his continued discussions with Mr. Bakish. The CBS special committee and representatives of Paul Weiss further discussed the governance and

 

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management terms of a potential transaction, including the initial composition of the combined company board of directors and a potential supermajority board approval requirement with respect to the removal and replacement of independent directors and certain senior executive officers of the combined company for a period of time following the closing, including NAI’s continuing consideration with respect to such matter. During this meeting, Ms. Beinecke informed the other members of the CBS special committee that she had previously discussed the foregoing matters with Ms. Redstone and that Ms. Redstone would consider the proposed supermajority board approval requirement with respect to independent directors but would not support a supermajority board approval requirement applicable to any other matters, including the replacement of executive officers. Ms. Redstone expressed a desire to have a combined board of directors act as one following a potential transaction with Viacom rather than based on prior affiliations. The CBS special committee then discussed the potential outlines of a supermajority board approval requirement with representatives of Paul Weiss, including that the appropriate percentage threshold constituting a supermajority would depend on the final size and composition of the combined company board of directors. The CBS special committee and representatives of CBS management also discussed factors to consider in connection with the negotiation of the exchange ratio. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On June 29, 2019, representatives of Lazard informed representatives of Morgan Stanley that the CBS special committee intended to share a proposal on governance and management matters in the coming days.

On July 3, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee continued its discussion of a potential transaction, particularly with respect to the composition of the senior management team of the combined company. During the meeting, Mr. Ianniello expressed his view that a potential transaction with Viacom could enhance CBS’ operations and assets and help expand CBS’ presence globally, and his expectation that Viacom may view the transaction as a way to enhance its current strategy around advertising-supported platforms. The CBS special committee also discussed Viacom’s advertising-based video on demand strategy. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On July 8, 2019, Mr. Bakish met in person with Mses. Beinecke and Byrne and Messrs. Goldner and Terrell, and the participants in the meeting discussed Mr. Bakish’s vision and strategic views for the combined company and his views with respect to the composition of the senior management team if a potential transaction between CBS and Viacom were to be consummated. The members of the CBS special committee present informed Mr. Bakish that a path to a potential transaction, from CBS’ perspective, would require that (1) first, the CBS special committee agree with Mr. Bakish on the vision for the combined company, (2) second, the respective special committees agree on governance and management matters and (3) third, the respective special committees agree on an exchange ratio, and that the CBS special committee intended to work through items (1) and (2) prior to working through item (3). In addition, the participants present discussed Mr. Bakish’s views on a potential transaction between CBS and Company A.

On July 9, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. During such meeting, Mr. Bakish provided an update regarding his meeting with certain members of the CBS special committee. The Viacom special committee discussed their preference to not negotiate governance matters prior to the exchange ratio, but ultimately determined to follow the process preferred by the CBS special committee in order to avoid unnecessary delay in the negotiations.

Also on July 9, 2019, in preparation for a meeting of the CBS special committee scheduled for July 12, 2019, Messrs. Bakish and Ianniello further discussed their respective strategic views relating to potential

 

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operating segments of the combined company, the organization of the combined company, integration of the different business segments of the two companies and the composition of the senior management team of the combined company.

Also on July 9, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance, during which Mr. Bakish provided an update regarding his meeting with Mr. Ianniello earlier that day.

On July 10, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received an update from Mr. Ianniello regarding his meeting with Mr. Bakish, and discussed strategy for the combined company, including how to enhance the value of CBS as a global multiplatform premium content company and the importance of diversification of content to prevent CBS from becoming overly dependent on any one content provider. As part of such discussions, the CBS special committee and Mr. Ianniello discussed the importance of retaining certain CBS senior executives in the event of a potential transaction. Those present also discussed a potential transaction with Company A, and the CBS special committee reaffirmed their conclusion from a previous meeting that a transaction with Company A should not be considered as an alternative to a potential transaction with Viacom but rather as a possible supplement to a potential transaction with Viacom. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Also on July 10, 2019, representatives of Lazard and Morgan Stanley discussed the timing of a potential transaction. In the course of the discussion, Lazard noted its expectation that Paul Weiss would provide a comprehensive governance proposal in the coming days. Lazard also noted that the CBS special committee had been briefed on the financial matters related to a transaction and periodically were briefed on market movements.

On July 11, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance. During such meeting, Mr. Bakish and representatives of Morgan Stanley and LionTree provided updates on the meetings and calls that had taken place since the prior meeting of the Viacom special committee.

On July 12, 2019, the CBS special committee held a meeting with Messrs. Bakish and Ianniello and representatives of Paul Weiss present for all or part of the meeting. At the meeting, Mr. Bakish described to the CBS special committee his 22-year tenure at Viacom and his current strategy for Viacom. Mr. Bakish also presented his views regarding market and industry developments, challenges faced by CBS and Viacom in the current media landscape, the industrial logic supporting a potential business combination of the two companies and his vision and proposed strategy for the combined company. The CBS special committee and Mr. Bakish also discussed the views of the CBS special committee regarding the composition of the senior management team of the combined company and regarding a potential transaction with Company A. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of CBS management.

Later on July 12, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance during which Mr. Bakish provided the Viacom special committee with a summary of the meeting he had with the CBS special committee earlier in the day.

Later on July 12, 2019, the CBS special committee conveyed its proposal to Mr. Bakish regarding the composition of the senior management team of the combined company.

During the weekend of July 12, 2019, representatives of Centerview and Lazard conveyed the proposal previously provided to Mr. Bakish to representatives of Morgan Stanley and LionTree and, in addition, noted the

 

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CBS special committee’s desire that (1) the name of the combined company include “CBS”, (2) the current independent directors of CBS comprise at least half of the combined company’s board of directors and (3) the ultimately agreed-upon directors and officers be protected from removal for as long as three years following the closing of a potential transaction.

On July 14, 2019, the Viacom special committee held a telephonic meeting with representatives of Cravath in attendance, during which members of the Viacom special committee reviewed the discussions that had taken place during that weekend. The Viacom special committee and representatives of Cravath discussed CBS’ stated positions on governance matters and what the Viacom special committee might propose in response to such positions.

On July 15, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree provided a proposed framework for the negotiation of the exchange ratio for a potential transaction with CBS, including with regard to the arguments the Viacom special committee could make for a more favorable exchange ratio than discussed in 2018, noting the possibility that the Viacom common stock was trading higher relative to CBS common stock than it would have on an “unaffected” basis. At such meeting, the Viacom special committee also discussed negotiation strategy in respect of governance and management matters with its legal and financial advisors.

On July 15, 2019, representatives of Paul Weiss contacted representatives of Cravath and representatives of Cleary, in each case, to convey the CBS special committee’s proposal for the governance terms that would apply to a potential business combination of CBS and Viacom, including with respect to (1) the initial composition of the combined company board of directors and the senior management team of the combined company, (2) certain protections relating to the change in size or composition of the combined company board of directors and the removal or replacement of certain senior executive officers, (3) the preservation of certain protections established by the Settlement Agreement and (4) the name of the combined company.

On July 16, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Cravath detailed the proposal on governance matters made by representatives of Paul Weiss on behalf of the CBS special committee on the preceding day. The Viacom special committee discussed its views on such proposal with its legal and financial advisors. Following such discussion, the Viacom special committee directed representatives of Cravath to respond to such proposal in the manner discussed at such meeting.

Also on July 16, 2019, representatives of Paul Weiss received a counterproposal from representatives of Cravath on behalf of the Viacom special committee that included modifications to certain of the governance and management proposals that had been relayed by representatives of Paul Weiss on July 15, 2019. Over the course of July 16 and July 17, 2019, representatives of Paul Weiss and Cravath had further discussions with respect to the governance terms that would apply to a potential business combination of CBS and Viacom.

Also on July 16, 2019, representatives of Cleary separately contacted representatives of Paul Weiss and representatives of Cravath to discuss the status of the potential transaction. During the course of those discussions, Cleary conveyed NAI’s requests that, if a transaction were agreed, CBS and Viacom (1) reimburse NAI for all of its expenses incurred in connection with a potential transaction and (2) indemnify NAI for all liabilities arising out of a potential transaction, including any related stockholder litigation, in light of NAI’s commitment to support a potential transaction.

On July 17, 2019, the Viacom special committee held an in-person meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance for all or part of the meeting. At such meeting, representatives of Cravath reviewed with the Viacom special committee a number of matters that had previously been discussed with members of the Viacom special committee, including (1) the capital structure,

 

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ownership and governance of each of CBS and Viacom, (2) the Viacom special committee’s mandate as authorized by the Viacom board of directors, (3) the possibility of conditioning a potential combination with CBS on a majority of the minority vote and the associated risks previously discussed by the Viacom special committee and (4) the key terms of the draft merger agreement under negotiation. In addition, representatives of Morgan Stanley and LionTree reviewed with the Viacom special committee the market valuation of, and the recent trading prices of shares of, each of Viacom and CBS, as well as a review of illustrative exchange ratios in the context of such recent trading prices. Representatives of Viacom management also provided the Viacom special committee with an update on the legal and financial diligence that had been undertaken in respect of CBS.

Also on July 17, 2019, the Viacom board of directors (other than Ms. Redstone and Ms. Norville (the latter of whom is the anchor of Inside Edition, which is a program produced and distributed by CBS Television Distribution, a unit of CBS), who were not in attendance pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS) held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. At such meeting, members of the Viacom special committee and representatives of Viacom management updated the remaining directors on the status of a potential transaction with CBS, including in respect of the diligence, negotiations and meetings that had taken place to date. In addition, representatives of Cravath reviewed with members of the Viacom board of directors present the legal considerations discussed with the Viacom special committee earlier in the day as well as the key terms of the draft merger agreement under negotiation. Representatives of Morgan Stanley and LionTree also reviewed with the members of the Viacom board of directors present the matters it had discussed with the Viacom special committee earlier that day.

On July 18, 2019, representatives of Centerview and Paul Weiss had a telephone call with representatives of LionTree and Cravath to discuss the open governance and management issues. The representatives discussed how each side was envisioning board composition, with the CBS construct being (1) the combined company board of directors would be initially comprised of 12 members, consisting of six independent directors designated by CBS, four independent directors designated by Viacom and two directors designated by NAI, (2) any change to the composition of the board of directors of the combined company would require the approval of a majority of the independent directors unaffiliated with NAI until the two-year anniversary of the closing, (3) removal or replacement of executive officers would require the approval of a majority of the independent directors unaffiliated with NAI until the two-year anniversary of the closing, except for removal of Mr. Ianniello, which would require such approval until the 18-month anniversary of the closing, (4) certain protections established by the Settlement Agreement relating to CBS’ board composition, CBS’ independent and NAI’s good faith consideration of extraordinary transactions involving CBS would be preserved following the closing with respect to the combined company and (5) the name of the combined company would include “CBS” and the Viacom construct being (1) the combined company board of directors would be initially comprised of 15 members, consisting of six independent directors designated by CBS, five independent directors designated by Viacom, one new independent director, two directors designated by NAI and the chief executive officer of the combined company, (2) any change to the composition of the board of directors of the combined company would require the approval of a majority of the independent directors unaffiliated with NAI until the 2020 annual meeting of the combined company, (3) removal or replacement of executive officers would not be subject to any special approval requirement, except for removal of Mr. Ianniello, which would require the approval of at least a majority of the independent directors unaffiliated with NAI until the six-month anniversary of the closing and (4) the name of the combined company would include “Viacom.” The representatives also discussed how the gap might be bridged.

Also on July 18, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. The CBS special committee received an update from representatives of Paul Weiss regarding their discussions to date with Cravath and Cleary. The representatives of Paul Weiss reviewed with the CBS special committee the elements of the governance discussions from July 16 and earlier that day. The CBS special committee and representatives of Paul Weiss then discussed possible responses to deliver to NAI and the Viacom special committee. During the meeting, the CBS

 

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special committee also discussed the strategic logic of a potential transaction between CBS and Viacom, including recent market and industry developments, and members of the CBS special committee affirmed their belief that a potential transaction with Viacom would be in the best interests of CBS and its stockholders (including those unaffiliated with NAI), subject to the negotiation of satisfactory transaction terms, and the importance of resolving the governance and management terms before further engaging in the negotiations of other terms, including the exchange ratio.

Also on July 18, 2019, representatives of Cravath sent the initial draft of the merger agreement to representatives of Cleary.

Throughout the negotiations, representatives of Viacom, CBS, NAI and their respective advisors continued to discuss potential deal structures, taking into account a number of considerations, before reaching agreement on the transaction structure reflected in the merger agreement.

On July 21, 2019, representatives of Centerview informed representatives of LionTree that the CBS special committee had made progress on a revised proposal on governance and management issues, which would be shared with the Viacom special committee in the coming days.

On July 22, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. The CBS special committee discussed the importance of any recommendation of such a potential transaction to the CBS board of directors receiving the unanimous approval of the members of the CBS special committee. The CBS special committee and representatives of Paul Weiss then discussed a revised proposal regarding the governance and management of the combined company, which would provide, among other things, that (1) the combined company’s board of directors would initially consist of 12 members, comprised of six independent directors designated by CBS, four independent directors designated by Viacom and two directors designated by NAI (one of which could be the chief executive officer of the combined company), (2) the approval of at least a majority of the independent directors unaffiliated with NAI would be required for any changes to the size of the combined company’s board of directors or removal or replacement of independent directors or senior executive officers until the second anniversary of the closing (or until the 15-month anniversary of the closing, in the case of Mr. Ianniello) and (3) the name of the combined company would include both “CBS” and “Viacom.” The CBS special committee directed the representatives to convey the revised proposal to the Viacom special committee’s advisors and legal counsel. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On July 25, 2019, representatives of Centerview and Paul Weiss met with representatives of LionTree and Cravath to convey the CBS special committee’s revised proposal relating to governance and management of the combined company. The participants discussed their respective sides’ views regarding the name of the combined company, the initial composition of the senior management team of the combined company and the duration of the approval requirement with respect to both changes to the size of the combined company board of directors and removal or replacement of independent directors and certain senior executive officers.

On July 26, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, the CBS special committee

 

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received an update from representatives of Centerview and Paul Weiss regarding their meeting with the representatives of LionTree and Cravath on July 25, 2019. The members of the CBS special committee had a detailed discussion regarding the meeting and also discussed the potential terms of Mr. Ianniello’s employment at the combined company and the importance of such employment for a meaningful period of time following the closing to the ability of CBS to operate certain assets of CBS and provide a sense of continuity and stability for the CBS employees following a potential transaction between CBS and Viacom, notwithstanding NAI’s and Viacom’s previously communicated positions regarding such matters. Following discussion with representatives of CBS management, Centerview, Lazard and Paul Weiss, the CBS special committee also deliberated as to the exchange ratio and the appropriate timing for negotiation thereof, particularly in light of the CBS special committee’s previous decision to align on the non-financial terms of a potential transaction before negotiating the exchange ratio.

On July 27, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Cravath and LionTree detailed the discussions that had taken place over the preceding few days and the latest proposal from the CBS special committee on governance matters. The Viacom special committee discussed such proposal with its financial and legal advisors and formulated a potential counterproposal. Following such discussion, the Viacom special committee directed representatives of Cravath to confirm that NAI would agree to the restrictions to be imposed on NAI under the CBS special committee’s proposal and to share such counterproposal with the CBS special committee via Paul Weiss.

Also on July 27, 2019, representatives of Cravath contacted representatives of Cleary to review the counterproposal on governance and management matters that would be conveyed to Paul Weiss, as described below. Representatives of Cleary indicated that they believed NAI would agree to the items outlined, subject to review of the specific proposed contractual terms used to implement the counterproposal.

Later on July 27, 2019, representatives of Cravath contacted representatives of Paul Weiss to convey the Viacom special committee’s revised proposal, which provided, among other things, that (1) the combined company’s board of directors would initially consist of 13 members, comprised of six independent directors designated by CBS, four independent directors designated by Viacom, two directors designated by NAI and the chief executive officer of the combined company, (2) the approval of at least a majority of the independent directors unaffiliated with NAI (including the approval of at least two Initial CBS Directors and two Initial Viacom Directors) (which approval we refer to as the “Requisite Approval”) would be required for any changes to the size of the combined company board of directors or removal of independent directors or senior executive officers until the 2021 annual meeting of the combined company (or until the 15-month anniversary of the closing, in the case of Mr. Ianniello) and (3) the combined company would be named “ViacomCBS.”

On July 29, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received an update from, and discussed with, representatives of Paul Weiss regarding the Viacom special committee’s revised proposal conveyed on July 27, 2019 and how the governance and management terms will be reflected in the transaction documents and organizational documents of the combined company. The CBS special committee and representatives of CBS management also deliberated as to the exchange ratio, as well as the open operational terms in connection with a potential transaction between CBS and Viacom, including the financial policy relating to dividends and stock buybacks and the employee benefit programs of the combined company. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

On July 29, 2019, representatives of Paul Weiss contacted representatives of Cravath to provide an update on the CBS special committee’s latest views on governance and management matters, which included, among other things, that (1) the CBS special committee preferred a 12-member board of directors (as opposed to 13)

 

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with half of the board comprised of directors designated by CBS, (2) the duration of the Requisite Approval requirement with respect to removal and replacement of independent directors and certain senior executive officers would need to be two years from the closing of a transaction (or 15 months in the case of Mr. Ianniello), (3) such senior executive officers would need to have new employment contracts in place at signing, (4) CBS should be permitted to enter into a potential transaction with Company A without the consent of Viacom prior to the closing of a potential transaction with Viacom and (5) the preferred name for the combined company would be “CBSViacom.”

Also on July 29, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Cravath detailed the proposal on governance matters made by representatives of Paul Weiss on behalf of the CBS special committee earlier that day. After discussion, the Viacom special committee determined to convene the following day to continue reviewing such proposal.

On July 30, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which the Viacom special committee continued to discuss with its legal and financial advisors the proposal on governance matters made by representatives of Paul Weiss on behalf of the CBS special committee on the day prior. Following such discussion, the Viacom special committee directed representatives of Cravath to respond to such proposal in the manner discussed at such meeting. At such meeting, representatives of Morgan Stanley and LionTree also provided an update regarding (1) the meeting held between representatives of LionTree and representatives of Centerview the prior day and (2) the financial advisors’ suggested strategy for negotiating the exchange ratio with CBS. Following discussion, the Viacom special committee directed its financial advisors to propose an exchange ratio of 0.63 to the financial advisors of the CBS special committee following the meeting of the CBS special committee scheduled for August 1, 2019.

Also on July 30, 2019, representatives of Cravath contacted representatives of Paul Weiss to convey the Viacom special committee’s revised proposal, which provided, among other things, that (1) the combined company board of directors would initially consist of 13 members, comprised of six independent directors designated by CBS, four independent directors designated by Viacom, two directors designated by NAI and the chief executive officer of the combined company, (2) the duration of the Requisite Approval requirement with respect to the removal of independent directors and certain senior executive officers would be two years from the closing of a transaction (or 15 months from the closing, in the case of Mr. Ianniello), (3) no additional Requisite Approval would be required for the appointment of any replacement independent director or officer and (4) any transaction between CBS and Company A would be subject to the prior approval of Viacom. Representatives of Cravath also indicated to representatives of Paul Weiss that it would need additional information regarding the proposed terms in the new employee contracts being entered into between CBS and its executive officers and that the name of the combined company was not a key business point for the Viacom special committee, but should have “Viacom” in it.

Also on July 31, 2019, Messrs. Bakish and Ianniello met to continue their discussion of a potential transaction, including with respect to the composition of the senior management team, allocation of authority and responsibilities as between Messrs. Bakish and Ianniello following the closing (particularly with respect to the CBS assets and operations), the financial policy of the combined company relating to dividends, stock buybacks and leverage ratio and proposed operational segments of the combined company.

Later on July 31, 2019, Mr. Bakish, Mr. Ianniello and representatives of Centerview and LionTree met to continue Messrs. Bakish’s and Ianniello’s discussion of a potential transaction, including with respect to the composition of the senior management team, allocation of authority and responsibilities as between Messrs. Bakish and Ianniello following the closing (particularly with respect to the CBS assets and operations), proposed operational segments of the combined company and CBS’ continued interest in a potential transaction with Company A.

 

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Also on July 31, 2019, representatives of Cleary separately contacted representatives of Paul Weiss and Cravath to further discuss the governance and management terms of a potential transaction between CBS and Viacom, including with respect to the name of the combined company, the initial membership of the combined company board of directors and the duration and scope of the Requisite Approval requirement. Representatives of Cleary conveyed NAI’s proposal that the combined company be named “ViacomCBS” following the closing to representatives of each of Paul Weiss and Cravath, and indicated that they would only be willing to agree to restrictions with respect to the composition of the board of directors of the combined company if the directors who would be subject to such restrictions were agreed to and named at signing.

Also on July 31, 2019, the Viacom special committee held a telephonic meeting with Mr. Bakish and representatives of Morgan Stanley, LionTree and Cravath in attendance, during which Mr. Bakish and representatives of LionTree provided an update on the meeting held with Mr. Ianniello and representatives of Centerview earlier in the day. In addition, representatives from Cravath provided an update regarding the matters discussed with representatives of Cleary earlier in the day.

On August 1, 2019, representatives of CBS management, Centerview, Lazard, Viacom management, Morgan Stanley and LionTree held a bring-down due diligence call, during which each management team provided updates and answered questions regarding matters that had occurred since the parties had completed their preliminary due diligence.

Also on August 1, 2019, Mr. Bakish met with Ms. Spade, who was being considered for the position of chief financial officer of the combined company. They discussed, among other things, the process of integrating the two companies and the importance of creating blended teams, including within the finance unit.

Also on August 1, 2019, the CBS special committee held a meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, the CBS special committee received updates from Mr. Ianniello regarding his meeting with Mr. Bakish on July 30, 2019 and from representatives of Paul Weiss regarding their discussion with representatives of Cleary on July 31, 2019. The CBS special committee also discussed the timing of a potential transaction and, in light of the parties having reached an agreement in principle on the composition of senior management of the combined company, the engagement of compensation consultants in connection with the negotiation of the terms of employment of certain key CBS executive officers in connection with a potential transaction between CBS and Viacom.

Later on August 1, 2019, following the meeting of the CBS board of directors, the CBS special committee held a meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss present at the meeting. The CBS special committee discussed considerations affecting the potential exchange ratio for the potential transaction, including the difficulty of ascertaining the “unaffected” stock price given the long history of discussions regarding a potential transaction as well as what would constitute an exchange ratio “at or near market.” During the course of such discussion, the members of the CBS special committee agreed that an acceptable exchange ratio could not be determined independently of the non-economic terms of a potential transaction. Those present also discussed the expectations of CBS management regarding Viacom’s quarterly earnings announcement scheduled to be held on August 8, 2019.

Later on August 1, 2019, at the direction of the Viacom special committee, representatives of LionTree and Morgan Stanley conveyed to representatives of Centerview and Lazard the Viacom special committee’s proposal to effect a business combination of CBS and Viacom at an exchange ratio of 0.63 of a share of CBS common stock per share of Viacom common stock.

On August 2, 2019, the Viacom special committee held a telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard on the prior day, during which representatives of Morgan Stanley and LionTree had proposed an

 

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exchange ratio of 0.63 on behalf of the Viacom special committee. In addition, Mr. Bakish provided an update regarding the bring-down diligence call and the calls that he had with Ms. Spade and Mr. Ianniello over the preceding days.

Also on August 2, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received an update from representatives of Centerview and Lazard regarding the proposed exchange ratio. The CBS special committee and representatives of Centerview, Lazard and Paul Weiss discussed in detail the exchange ratio proposed by the Viacom special committee, the relationship between the exchange ratio and the non-financial terms of a potential transaction and the difficulty of determining the appropriate measurement period for assessing an appropriate “market” exchange ratio and of ascertaining the “unaffected” stock price given the long history of discussions regarding a potential transaction, the scope and duration of media coverage surrounding a potential combination of the two companies and the view of the CBS special committee that the exchange ratio proposed as part of the previous transaction negotiations that occurred between CBS and Viacom in 2018 was irrelevant in the context of the current negotiations. Following such discussion, the CBS special committee directed representatives of Centerview and Lazard to communicate to representatives of LionTree and Morgan Stanley that the CBS special committee was not willing to proceed with negotiations at the exchange ratio proposed by the Viacom special committee and to ask the Viacom special committee to make a new proposal. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Later on August 2, 2019, representatives of Centerview and Lazard contacted representatives of Morgan Stanley and LionTree to inform them that the CBS special committee would not be making a counterproposal to the Viacom special committee’s proposed exchange ratio of 0.63 of a share of CBS common stock per share of Viacom common stock. Representatives of Centerview and Lazard stated that, if negotiations were to move forward, the Viacom special committee would need to make another proposal that was closer to where the CBS special committee would be willing to transact.

Later on August 2, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree provided an update regarding the call that such representatives had with representatives of Centerview and Lazard earlier that day. The Viacom special committee then discussed with its financial and legal advisors whether it should make another bid and the financial parameters for such a bid. Following such discussion, the Viacom special committee directed its financial advisors to propose an exchange ratio of 0.615 of a share of CBS common stock per share of Viacom common stock to the financial advisors of the CBS special committee.

On August 3, 2019, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to deliver the Viacom special committee’s revised exchange ratio proposal of 0.615 of a share of CBS common stock per share of Viacom common stock.

On August 4, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, the CBS special committee received an update from representatives of Centerview and Lazard regarding the revised proposal from the Viacom special committee. Representatives of Centerview and Lazard also presented an updated preliminary financial analysis of the proposed business combination between CBS and Viacom, including a discussion of the standalone and relative valuations of CBS and Viacom, the pro forma valuation of the combined company and CBS management’s current views of potential cost and revenue synergies to be realized from the potential transaction. The representatives also presented the implied exchange ratios based on the 52-week closing trading range of CBS’ and Viacom’s expected stock prices, analyst price targets and discounted cash flow analysis based on different assumptions. The CBS special committee, the CBS management team and representatives of Centerview, Lazard and Paul Weiss discussed Centerview and Lazard’s presentation.

 

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Following such presentation, Mr. Ianniello expressed his views regarding the rapidly-evolving media industry landscape and reiterated his belief in the industrial logic supporting a potential transaction with Viacom. The CBS special committee then engaged in a discussion with the representatives regarding the tactical considerations around negotiating an exchange ratio and the potential benefits and considerations of conveying a counterproposal of an exchange ratio of 0.55 of a share of CBS common stock per share of Viacom common stock. Following such discussion, the CBS special committee then authorized the representatives of Centerview and Lazard to convey the CBS special committee’s proposal to effect a business combination at an exchange ratio of 0.55 of a share of CBS common stock per share of Viacom common stock. The CBS special committee also authorized representatives of Paul Weiss to distribute a revised draft merger agreement and drafts of other transaction documents and organizational documents of the combined company to Cravath and Cleary. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Later on August 4, 2019, representatives of Centerview and Lazard contacted representatives of Morgan Stanley and LionTree to deliver the CBS special committee’s revised exchange ratio proposal of 0.55 of a share of CBS common stock per share of Viacom common stock.

Later on August 4, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree provided an update regarding the call that such representatives had with representatives of Centerview and Lazard earlier that day. After discussion, the Viacom special committee determined to convene the following day to continue reviewing the exchange ratio proposal made by representatives of Centerview and Lazard on behalf of the CBS special committee.

Later on August 4, 2019, representatives of Paul Weiss sent a revised draft merger agreement, draft organizational documents and other draft agreements to representatives of each of Cravath and Cleary. From August 4, 2019 through the date of the merger agreement, representatives of Paul Weiss, Cravath and Cleary exchanged drafts of, and engaged in various telephonic discussions regarding, the merger agreement and the other agreements and documents to be entered into in connection with the merger.

On August 5, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree detailed a proposed strategy for responding to the exchange ratio proposal made by representatives of Centerview and Lazard on behalf of CBS on the prior day. After discussion, the Viacom special committee directed its financial advisors to propose an exchange ratio of 0.6125 to the financial advisors of the CBS special committee. In addition, representatives of Cravath provided an update on the revised draft merger agreement, draft organizational documents and other draft agreements that had been provided by Paul Weiss on behalf of the CBS special committee on the prior day, copies of which had been distributed to members of the Viacom special committee prior to the meeting.

Later on August 5, 2019, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to deliver the Viacom special committee’s revised exchange ratio proposal of 0.6125 of a share of CBS common stock per share of Viacom common stock.

Later on August 5, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, the CBS special committee received an update from representatives of Centerview and Lazard regarding the proposed exchange ratio. Representatives of Centerview and Lazard reviewed with the CBS special committee a range of potential exchange ratios and the implied premium or discount to the stockholders of CBS at each such exchange ratio. As part of such discussion, the members of the CBS special committee discussed, among other things, the relative market valuations of CBS and Viacom, the appropriate measurement period to consider in determining the exchange ratio and external factors affecting the stock prices of the two companies (including upcoming earnings

 

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announcements). The CBS special committee discussed with representatives of Centerview and Lazard the relative market valuations of the two companies and, informed by such discussion, authorized the representatives of Centerview and Lazard to convey the CBS special committee’s proposal to effect a potential transaction at an exchange ratio of 0.5625 of a share of CBS common stock per share of Viacom common stock. The CBS special committee further directed its advisors to communicate to the Viacom special committee that, subject to the outcome of the negotiation of the non-financial terms of a potential transaction, the CBS special committee would only agree to enter into a potential transaction at an exchange ratio that implied a premium to CBS stockholders.

Also on August 5, 2019, the Viacom board of directors held a regularly scheduled in-person meeting with representatives of Viacom management in attendance for all or part of the meeting. Upon completion of the ordinary course agenda items, Ms. Redstone and Ms. Norville departed the meeting pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS and the remaining directors were joined by representatives of Morgan Stanley, LionTree and Cravath. At such meeting, members of the Viacom special committee and representatives of Viacom management updated the remaining directors on the status of a potential transaction with CBS, including in respect of the diligence, negotiations and meetings that had taken place to date. In addition, representatives of Cravath reviewed with the members of the Viacom board of directors present (1) the Viacom special committee’s mandate as authorized by the Viacom board of directors and (2) the key terms of the latest drafts of the transaction documentation, which included the merger agreement and the organizational documents of the combined company. Representatives of Morgan Stanley and LionTree also discussed with such members the most recent version of their respective preliminary financial analyses.

Later on August 5, 2019, the Viacom special committee held an in-person meeting with representatives of Cravath and Pearl Meyer, compensation consultants to Viacom’s compensation committee (which we refer to as “Pearl Meyer”), in attendance. During such meeting, representatives of Cravath and Pearl Meyer provided the Viacom special committee with an update on certain compensation matters under consideration with respect to Mr. Bakish, Ms. D’Alimonte and Mr. Davis in connection with a potential transaction with CBS. In addition, the Viacom special committee provided feedback to representatives of Cravath on a number of open issues in the latest drafts of the transaction documentation, including in respect of deal protection and governance matters.

Later on August 5, 2019, representatives of Centerview and Lazard contacted representatives of Morgan Stanley and LionTree to deliver the CBS special committee’s revised exchange ratio proposal of 0.5625 of a share of CBS common stock per share of Viacom common stock.

On August 6, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard on the prior day, during which representatives of Centerview and Lazard had proposed an exchange ratio of 0.5625 on behalf of the CBS special committee. In addition, representatives of Cravath provided an update on the revised transaction documentation that had been provided to Paul Weiss and Cleary earlier that day, detailing certain issues that remained open in the drafts.

Subsequently, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which the participants in attendance discussed negotiation strategy, including whether the Viacom special committee should revise its exchange ratio bid. Following such discussion, the Viacom special committee determined to adjourn the meeting and reconsider the topic on the following day.

Following that meeting, at the direction of their respective clients, representatives of LionTree and Centerview discussed the status of the exchange ratio negotiations. At the direction of the Viacom special committee, representatives of LionTree noted that the Viacom special committee would likely not be amenable to

 

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consummating a transaction at an exchange ratio that implied a significant premium to CBS stockholders relative to the “at market” exchange ratio.

On August 7, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of LionTree provided an update regarding the call held with representatives of Centerview on the prior day. In addition, the Viacom special committee discussed with its financial and legal advisors the issues raised by representatives of Paul Weiss during its call with representatives of Cravath on the prior day.

Later on August 7, 2019, at the direction of the Viacom special committee, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to discuss whether there was any possibility of reaching agreement on an exchange ratio in advance of the quarterly earnings releases scheduled for the following day. Representatives of Centerview and Lazard stated that they did not believe doing so would be feasible given the open issues between the parties, including the differences between the exchange ratio proposed by each of CBS and Viacom.

On August 8, 2019, Viacom announced its quarterly earnings for the quarter ended June 30, 2019. Later on August 8, 2019, CBS also announced its quarterly earnings for such quarter.

On August 9, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which the participants in attendance discussed negotiation strategy in respect of the exchange ratio. In addition, representatives of Cravath provided an update regarding the open issues in the transaction documentation.

Also on August 9, 2019, representatives of Morgan Stanley and LionTree discussed with representatives of Centerview and Lazard the status of the exchange ratio negotiations and recent market metrics for the two companies.

On August 10, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard on the prior day. In addition, representatives of Cravath provided an update on the issues that remained open in the negotiation of the merger agreement and other documents associated with the merger, including with respect to the role and scope of authority of Mr. Ianniello in the combined company and the scope of actions requiring a Requisite Approval.

Also on August 10, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. At the meeting, representatives of Centerview and Lazard presented a further updated preliminary financial analysis of the proposed business combination between CBS and Viacom, including a discussion of the standalone and relative valuations of CBS and Viacom and the pro forma valuation of the combined company. Representatives of Centerview and Lazard noted that the market implied exchange ratio as of market close on August 9, 2019 was 0.614, compared to the market implied exchange ratio as of market close on August 2, 2019 of 0.591, and expressed their view that the change in the market implied exchange ratio could likely be attributed to the investment community’s reaction to media reports that Viacom stockholders may receive a premium in connection with a potential transaction between CBS and Viacom or the investment community’s reaction to CBS’ and Viacom’s recent earnings announcements. Representatives of Centerview and Lazard also presented CBS management’s projections with respect to potential synergies that could be achieved in connection with a potential transaction between CBS and Viacom and noted that, based on their analyses, the transaction would likely result in significant accretion for both companies at any exchange ratio within the range currently being negotiated between CBS and Viacom. The CBS special committee discussed with representatives of CBS management, Centerview and Lazard the potential benefits of the contemplated transaction to the stockholders of

 

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CBS, taking into account the scaling of benefits, strategic optionality, stronger industry positioning arising from an enhanced content library and international platform, resolution of transaction-related uncertainties and other synergies that could result from a potential transaction if consummated on acceptable terms. Thereafter, representatives of Paul Weiss reviewed and discussed with the CBS special committee in detail the proposed transaction terms set forth in the latest drafts of the merger agreement, organizational documents and the other agreements to be entered into in connection with the contemplated transaction. Representatives of Paul Weiss summarized the open transaction terms, including (i) the proposed terms of the employment agreements of certain key executive officers, which the CBS special committee had sought in order to ensure continuity in the management of the CBS business after the closing, and (ii) NAI’s previous request for CBS and Viacom to reimburse NAI for transaction-related expenses. For a description of the terms of the employment agreements, see the section entitled “The Merger—Interests of CBS’ Executive Officers and Directors in the Merger.” The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

During the course of the day on August 10, 2019, representatives of Centerview and Lazard held three calls with representatives of Morgan Stanley and LionTree regarding the exchange ratio, during which the participants held firm on the respective bids of the CBS special committee and the Viacom special committee.

On August 11, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. Representatives of Centerview and Lazard informed the CBS special committee that they were continuing to engage in informal discussions regarding the exchange ratio with representatives of LionTree and Morgan Stanley, without either side making a formal proposal, but that Centerview and Lazard had relayed to the representatives of LionTree and Morgan Stanley that the CBS special committee would only agree to enter into a potential transaction at an exchange ratio below 0.60 of a share of CBS common stock per share of Viacom common stock, subject to the outcome of the negotiation of the open transaction terms. The CBS special committee then had a detailed discussion with representatives of CBS management, Centerview and Lazard regarding the current media landscape and the stronger industrial logic supporting a potential transaction at present compared to the previous year. Taking into account recent market trends towards consolidation (and its effects on direct-to-consumer businesses), the CBS special committee and the CBS management team observed a combination of the two companies would permit both to better compete with their industry peers. During the course of such discussion, members of the CBS special committee reiterated their views that the contemplated transaction would help CBS compete against other consolidating media and entertainment companies. Representatives of Centerview and Lazard also expressed their views regarding the potential benefits of the contemplated transaction in light of the rapidly changing industry landscape, including certain strategic opportunities that may only be available to the combined company and not to CBS on a standalone basis, and taking into account the potential synergies that could be achieved in connection with a potential transaction as projected by CBS management. Following such discussion, the CBS special committee deliberated on the range of exchange ratios implied by Centerview’s and Lazard’s valuation analyses and concurred that, taking into account the potential benefits of the contemplated transaction, the contemplated transaction would be accretive to the stockholders of CBS at any exchange ratio within the range currently being negotiated between CBS and Viacom. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Later on August 11, 2019, at the direction of their respective clients, representatives of Centerview and Lazard suggested to representatives of Morgan Stanley and LionTree that the financial advisors hold a call in which both sets of financial advisors would have authority to make revised bids on the exchange ratio.

Later on August 11, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard earlier that

 

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day, during which the participants had discussed having a follow-up call in which both sets of financial advisors would have the authority to make revised bids on the exchange ratio. The Viacom special committee discussed with its financial and legal advisors what to propose as its revised bid. Following such discussion, the Viacom special committee authorized its financial advisors to propose an exchange ratio of as low as 0.61 to the financial advisors of the CBS special committee, subject to the financial advisors of the CBS special committee first making a move in Viacom’s favor. In addition, representatives of Cravath provided an update on open issues in the transaction documentation, including with respect to the scope of authority and role of Mr. Ianniello in the combined company and other employment-related matters.

Later on August 11, 2019, representatives of Centerview and Lazard and representatives of Morgan Stanley and LionTree exchanged revised exchanged ratio bids of 0.5825 and 0.61, respectively, of a share of CBS common stock per share of Viacom common stock.

Later on August 11, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard earlier that day, during which representatives of Centerview and Lazard had proposed an exchange ratio of 0.5825 on behalf of the CBS special committee. The Viacom special committee discussed with its financial and legal advisors whether and what to propose as its revised bid. Following such discussion, the Viacom special committee directed its financial advisors to propose an exchange ratio of 0.6064 to the financial advisors of the CBS special committee. The meeting of the Viacom special committee was subsequently recessed.

Later on August 11, 2019, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to deliver the Viacom special committee’s revised exchange ratio proposal of 0.6064 of a share of CBS common stock per share of Viacom common stock.

Also on August 11, 2019, the CBS special committee held two additional telephonic meetings, with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meetings. The CBS special committee received updates on the negotiations between the parties, including NAI’s agreement to withdraw its request for CBS and Viacom to reimburse NAI for transaction-related expenses, and the remaining open transaction terms set forth in the latest drafts of the merger agreement, organizational documents and the other agreements to be entered into in connection with the contemplated transaction, copies of which had been distributed to the members of the CBS special committee prior to the meeting. At these meetings, representatives of Centerview and Lazard reiterated their views expressed in previous meetings of the CBS special committee that, taking into account the various strategic alternatives and the current industry landscape, they did not believe there was any alternative transaction available to CBS at the present time as favorable as the Viacom transaction. Representatives of CBS management expressed their agreement with the foregoing and reiterated their view that the contemplated transaction, if consummated on acceptable terms, would be accretive to CBS stockholders as compared with remaining as a standalone company. Representatives of Centerview and Lazard further affirmed, consistent with prior discussions with representatives of NAI, that neither NAI nor its representatives had participated in the negotiation of the exchange ratio, and stated their expectation that NAI would likely be indifferent to the exchange ratio given its similar percentage interest in the common stock of each of Viacom and CBS and the relative sizes of the two companies. The CBS special committee also discussed employee-related terms of the transaction, including the employment agreement and other compensation arrangements that had been negotiated with Mr. Ianniello. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Also on August 11, 2019, the Viacom board of directors (other than Ms. Redstone and Ms. Norville, who were not in attendance pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS) held a special telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of

 

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Morgan Stanley and LionTree provided an update regarding the status of the exchange ratio negotiations. In addition, representatives of Morgan Stanley and LionTree provided an overview of their respective preliminary financial analyses and informed the directors present that, while they would not be able to provide an opinion on fairness until and unless a deal was reached, both financial advisors believed that they would be able to deliver an opinion with regard to fairness at an exchange ratio in the range being discussed between CBS and Viacom. In addition, representatives of Cravath provided the directors present with an overview of the terms of the proposed transaction documentation, including in respect of structure, proposed governance, conditionality, deal protection and termination rights. Representatives of Cravath also provided an update regarding employee-related terms of the transaction, including a description of the employment agreements and other compensation arrangements that had been negotiated with each of Mr. Bakish, Ms. D’Alimonte and Mr. Davis.

Later on August 11, 2019, representatives of Centerview and Lazard suggested to representatives of Morgan Stanley and LionTree that the financial advisors hold another call in which both sides have authority to make revised bids on the exchange ratio.

Later on August 11, 2019, the Viacom special committee reconvened its telephonic meeting four more times, with representatives of Morgan Stanley, LionTree and Cravath in attendance, during each of which representatives of Morgan Stanley and LionTree provided an update regarding calls held with representatives of Centerview and Lazard since each prior portion of the meeting had been recessed. At the first reconvened session of the meeting, the Viacom special committee discussed with its financial and legal advisors what to propose as a revised bid in the event that the CBS special committee increased its exchange ratio bid as and to the extent its financial advisors expected. Following such discussion, the Viacom special committee authorized its financial advisors to propose an exchange ratio of as low as 0.604 to the financial advisors of the CBS special committee, subject to the financial advisors of the CBS special committee first making a move in Viacom’s favor. In addition, representatives of Cravath provided an update on the open issues in the transaction documentation, copies of which had been distributed to members of the Viacom special committee prior to the discussion, including with respect to the scope of authority and role of Mr. Ianniello in the combined company and other employment-related matters. The meeting of the Viacom special committee was subsequently recessed, during which time representatives of Centerview and Lazard and representatives of Morgan Stanley and LionTree held a call to exchange revised exchange ratio bids. During such call, representatives of Centerview and Lazard proposed an exchange ratio of 0.587 of a share of CBS common stock per share of Viacom common stock. In response, representatives of Morgan Stanley and LionTree declined to formally counter such bid, but stated that they would have been prepared to move to a ratio of 0.604 had representatives of Centerview and Lazard relayed a more attractive bid on behalf of CBS. Subsequently, the Viacom special committee reconvened its telephonic meeting and discussed negotiation strategy in respect of the exchange ratio with its financial and legal advisors, and subsequently authorized its financial advisors to continue to exchange bids with representatives of Centerview and Lazard, subject to an exchange ratio bid floor of 0.60. In addition, representatives of Cravath provided an update on the open issues in respect of the scope of authority and role of Mr. Ianniello in the combined company. The meeting of the Viacom special committee was subsequently recessed, during which time representatives of Centerview and Lazard and representatives of Morgan Stanley and LionTree held a call to exchange revised exchange ratio bids. During such call, representatives of Morgan Stanley and LionTree proposed an exchange ratio of 0.603 of a share of CBS common stock per share of Viacom common stock. In response, representatives of Centerview and Lazard proposed an exchange ratio of 0.5875 of a share of CBS common stock per share of Viacom common stock. The Viacom special committee later reconvened its telephonic meeting, during which the participants in attendance discussed negotiation strategy in respect of the exchange ratio. The meeting of the Viacom special committee was subsequently recessed, during which time representatives of LionTree held a call with representatives of Centerview to discuss the status of the exchange ratio negotiations and whether the parties would be able to reach agreement on the exchange ratio. The Viacom special committee then reconvened its telephonic meeting, during which the participants in attendance discussed negotiation strategy in respect of the exchange ratio. Following such discussion, the Viacom special committee directed its financial advisors to propose an exchange ratio of 0.5965 to the financial advisors of the CBS special committee.

 

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Later on August 11, 2019, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to deliver the Viacom special committee’s revised exchange ratio proposal of 0.5965 of a share of CBS common stock per share of Viacom common stock.

On August 12, 2019, the Viacom special committee held a telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Morgan Stanley and LionTree provided an update regarding the call held with representatives of Centerview and Lazard the prior day. The participants discussed, as relevant, negotiation strategy in respect of the exchange ratio, and separately, the process for reaching a final agreement with CBS and NAI on other matters.

Later on August 12, 2019, representatives of CBS, Viacom, Paul Weiss and Cravath held a confirmatory legal due diligence call.

Later on August 12, 2019, the Viacom special committee held a second telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which representatives of Cravath provided an update regarding the open issues in the draft transaction documentation, including with respect to the role and scope of authority of Mr. Ianniello and other employment-related matters. The meeting of the Viacom special committee was subsequently recessed.

In addition, throughout the day on August 12, 2019, Ms. Seligman had conversations with Mr. Goldner, both one-on-one and with representatives of Paul Weiss, Cravath and counsel to CBS management, regarding the open issues in the draft employment agreements being negotiated by CBS with certain of its senior management members. Mr. Goldner proposed that he would work with such management members to attempt to resolve such issues. Ms. Seligman and Mr. Goldner apprised their respective special committees of the status of such conversations throughout the day.

Later on August 12, 2019, the Viacom special committee reconvened its telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance.

Later on August 12, 2019, the Viacom special committee held a third telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance, during which the participants in attendance discussed the process for reaching a final agreement with CBS and NAI. The meeting of the Viacom special committee was subsequently recessed.

Later on August 12, 2019, the CBS special committee reconvened to resume its telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance for all or part of the meeting. The CBS special committee received an update from representatives of Centerview and Lazard regarding the negotiation of the exchange ratio and the status of the transaction, and the CBS special committee authorized the representatives to offer, or accept an offer, to effect a business combination of CBS and Viacom at an exchange ratio of 0.59625 of a share of CBS common stock per share of Viacom common stock. The CBS special committee also formalized the engagement of Centerview and Lazard. The CBS special committee then met in executive session with representatives of Paul Weiss to further discuss the matters that were discussed earlier in the meeting outside the presence of financial advisors and CBS management.

Later on August 12, 2019, representatives of Centerview and Lazard contacted representatives of Morgan Stanley and LionTree to deliver the CBS special committee’s revised exchange ratio proposal of 0.59625 of a share of CBS common stock per share of Viacom common stock.

Later on August 12, 2019, the Viacom special committee reconvened its telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of LionTree provided an update regarding the call held with representatives of Centerview and Lazard since the meeting had been recessed, during which representatives of Centerview and Lazard had proposed an exchange

 

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ratio of 0.59625 on behalf of the CBS special committee. The Viacom special committee sought input from its financial advisors as to whether it would be feasible to further negotiate an improved exchange ratio and as to whether such financial advisors would be prepared to deliver an opinion as to fairness with respect to such exchange ratio. Following such discussion, the Viacom special committee directed its financial advisors to accept an exchange ratio of 0.59625, subject to confirmation that all the transaction documents were in agreed form. The meeting of the Viacom special committee was subsequently recessed.

Later on August 12, 2019, representatives of Morgan Stanley and LionTree contacted representatives of Centerview and Lazard to accept, on behalf of the Viacom special committee and subject to the finalization of the transaction documentation and the obtaining of the necessary approvals, the CBS special committee’s revised exchange ratio proposal of 0.59625 of a share of CBS common stock per share of Viacom common stock.

Later on August 12, 2019, the Viacom special committee reconvened its telephonic meeting with representatives of Morgan Stanley, LionTree and Cravath in attendance. At such meeting, representatives of Cravath provided an update regarding the open issues in the draft employment agreements that had been received from Paul Weiss.

Later on August 12, 2019, the Viacom board of directors (other than Ms. Redstone and Ms. Norville, who were not in attendance pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS), including all of the members of the Viacom special committee, held a special telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. During such meeting, representatives of Morgan Stanley and LionTree provided the directors present with an update on the status of the negotiations, including as to the fact that the CBS special committee and the Viacom special committee had agreed in principle to an exchange ratio of 0.59625, subject to finalizing the transaction documentation and obtaining the necessary approvals. In addition, representatives from Cravath provided the directors present with an overview of the remaining steps to agreeing to a transaction with CBS and NAI, including that the parties were still in the process of negotiating the terms of the employment agreements for Mr. Ianniello, Ms. Spade and Ms. Franco (in the case of NAI, principally with respect to non-financial terms including responsibilities and reporting lines). The meeting of the Viacom board of directors was subsequently recessed.

Also on August 12, 2019 and through the morning of August 13, 2019, representatives of Cleary, Cravath, Hughes Hubbard & Reed LLP (which we refer to as “Hughes Hubbard”), legal counsel to certain members of CBS management with respect to their employment agreements, and Paul Weiss held telephonic meetings to negotiate and seek to resolve the remaining open points and finalize the employment documentation.

On August 13, 2019, the CBS special committee held a telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss present, and the CBS special committee received an update from representatives of Paul Weiss regarding the open transaction terms. The CBS special committee then temporarily adjourned the meeting and agreed to reconvene later on the same day.

Also on August 13, 2019, the Viacom board of directors (other than Ms. Redstone and Ms. Norville, who were not in attendance pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS), including all of the members of the Viacom special committee, reconvened its special telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. During such reconvened meeting, representatives of Morgan Stanley and LionTree provided their respective financial analyses and confirmed that they were prepared to deliver opinions to the Viacom special committee regarding the fairness of the consideration to be received by the holders of shares of Viacom Class A common stock and Viacom Class B common stock, taken in the aggregate, subject to being requested to do so by the Viacom special committee once the final terms of the proposed transaction had been agreed. In addition, representatives from Cravath provided the directors present with an update on the remaining steps to agreeing to a transaction with CBS and NAI. The meeting of the Viacom board of directors was subsequently recessed.

 

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Later on August 13, 2019, Ms. Seligman, Mr. Goldner and representatives of Cravath, Hughes Hubbard and Paul Weiss held telephonic meetings to continue the negotiation of the remaining open points. At the conclusion of these meetings, the parties finalized the proposed terms for the potential transaction, subject to approvals by the CBS board of directors, the CBS special committee, the Viacom board of directors, the Viacom special committee and NAI.

Later on August 13, 2019, the Viacom board of directors (other than Ms. Redstone and Ms. Norville, who were not in attendance pursuant to their agreement to recuse themselves from participating in any deliberations or votes related to a potential business combination between Viacom and CBS), including all of the members of the Viacom special committee, reconvened its special telephonic meeting with representatives of Viacom management, Morgan Stanley, LionTree and Cravath in attendance. During such reconvened meeting, representatives of Cravath confirmed that the terms of the final agreed transaction documentation, copies of which had been shared with the Viacom special committee and the Viacom board of directors, remained consistent with the presentation made by representatives of Cravath to the Viacom board of directors on August 11, 2019, with those changes that had been discussed with the Viacom special committee as the negotiations had proceeded. Representatives of Morgan Stanley and LionTree delivered their respective oral opinions, each of which was subsequently confirmed by the delivery of separate written opinions dated as of August 13, 2019, that, as of August 13, 2019, and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken in preparing such opinions, that the consideration to be received by the holders of the shares of Viacom Class A common stock and Viacom Class B common stock, taken in the aggregate, pursuant to the merger agreement was fair, from a financial point of view, to such holders (other than the excluded parties). The meeting of the Viacom board of directors temporarily recessed to permit the convening of the Viacom special committee. The Viacom special committee then unanimously (1) determined that it was advisable and in the best interests of Viacom and its stockholders for Viacom to enter into the merger agreement and consummate the contemplated transactions, including the merger, (2) recommended that the Viacom board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger, and (3) recommended that Viacom stockholders entitled to vote adopt the merger agreement. Following the adjournment of the Viacom special committee and the reconvening of the Viacom board meeting, the members of the Viacom board of directors present then, taking into account the recommendation of the Viacom special committee, unanimously (A) determined that the merger agreement and the transactions contemplated thereby were in the best interests of Viacom and its stockholders, (B) approved and declared advisable the merger agreement and the consummation of the contemplated transactions, including the merger, and (C) recommended that Viacom stockholders entitled to vote adopt the merger agreement.

Later on August 13, 2019, the CBS special committee reconvened to resume its telephonic meeting with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. At the meeting, representatives of Paul Weiss reviewed and discussed with the CBS special committee the final transaction terms, and the CBS special committee considered final drafts of the merger agreement, organizational documents and the other agreements to be entered into in connection with the contemplated transactions, which remained consistent with the copies of such documents that had been distributed to the CBS special committee prior to the meeting. In so considering, the CBS special committee considered the final transaction terms in comparison to its initial proposals, as well as the positions articulated by representatives of Viacom and NAI throughout the negotiating process. Representatives of Centerview and Lazard reviewed with the CBS special committee their joint financial analyses of the exchange ratio, and rendered to the CBS special committee their respective oral opinions, each of which was subsequently confirmed by delivery of separate written opinions dated as of August 13, 2019 that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing such opinions, the exchange ratio provided for pursuant to the merger agreement is fair, from a financial point of view, to the holders of outstanding shares of CBS common stock (other than shares of CBS common stock held by NAI or any other affiliate of CBS or Viacom, and other than shares of CBS common stock held by CBS or any of its subsidiaries as treasury shares). Representatives of Paul Weiss reviewed the CBS special committee’s duties and

 

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responsibilities as well as the approvals required from the CBS special committee. The CBS special committee then unanimously (1) determined that it was advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) approved the merger agreement and the contemplated transactions, including the merger, and (3) recommended that the CBS board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger and the stock issuance.

Later on August 13, 2019, following the meeting of the CBS special committee, the CBS board of directors met telephonically with representatives of CBS management, Centerview, Lazard and Paul Weiss in attendance. Ms. Redstone and Messrs. Klieger and Zelnick, who previously delivered waivers of notice, were not present at the meeting. Upon recommendation of the CBS special committee, the members of the CBS board of directors present at the meeting unanimously (1) determined that it was advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, (3) resolved to submit the merger agreement and the contemplated transactions to the stockholders of CBS entitled to vote for adoption and (4) recommended that the CBS stockholders entitled to vote adopt the merger agreement and the stock issuance.

Later on August 13, 2019, CBS and Viacom executed the merger agreement. Following execution of the merger agreement, CBS and Viacom issued a joint press release announcing entry into the merger agreement.

Recommendations of the CBS Special Committee and the CBS Board of Directors; Reasons for CBS to Enter into the Merger Agreement

On April 9, 2019, the CBS board of directors established by unanimous written consent the CBS special committee, consisting of independent directors Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman and Frederick O. Terrell, each of whom is unaffiliated with NAI. Pursuant to such unanimous written consent, the CBS special committee was delegated the full and exclusive power and authority of the CBS board of directors to the fullest extent permitted by law to, among other things, consider, review and evaluate and, if appropriate, negotiate the terms of a possible merger or business combination between CBS and Viacom and to make recommendations to the CBS board of directors and to CBS stockholders with respect thereto.

At a meeting held on August 13, 2019, the CBS special committee unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) approved the merger agreement and the contemplated transactions, including the merger, and (3) recommended that the CBS board of directors approve and declare the advisability of the merger agreement and the consummation of the contemplated transactions, including the merger and the stock issuance.

At a meeting of the CBS board of directors held on August 13, 2019, following the meeting of the CBS special committee, the members of the CBS board of directors who were present at such meeting unanimously (1) determined that it is advisable and in the best interests of CBS and its stockholders for CBS to enter into the merger agreement and consummate the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws, (2) adopted, approved and declared advisable the merger agreement and the contemplated transactions, including the merger, the stock issuance and the adoption of the A&R Charter and A&R Bylaws and (3) recommended that the CBS stockholders entitled to vote adopt the merger agreement and approve the stock issuance. The members of the CBS board of directors who were present at the meeting were Mses. Beinecke, Byrne, Griego, Minow and Schuman and Messrs. Countryman, Goldner and

 

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Terrell, each of whom is a member of the CBS special committee and is unaffiliated with NAI, and who collectively constitute more than two-thirds of the members of the CBS board of directors unaffiliated with NAI. The three members of the CBS board of directors who are not members of the CBS special committee, Messrs. Klieger and Zelnick and Ms. Redstone, delivered waivers of notice prior to the meeting and were not present at the meeting. On October 16, 2019, CBS and Viacom entered into the merger agreement amendment, following the recommendation by each company’s special committee and approval by each company’s board of directors.

The CBS board of directors recommends that CBS stockholders entitled to vote deliver a written consent “FOR” each of the CBS proposals.

In arriving at these determinations and recommendations, the CBS special committee and the CBS board of directors reviewed and discussed a significant amount of information and consulted with CBS’ management, legal advisors and financial advisors. The following are some of the significant factors that supported the CBS special committee’s recommendation and the CBS board of directors’ decision to approve the merger agreement (which are presented below in no particular order and which were neither ranked nor weighted in any manner by either the CBS special committee or the CBS board of directors):

 

   

the CBS special committee’s and the CBS board of directors’ belief that the overall potential long-term stockholder value creation proposition to CBS stockholders of a merger with Viacom would be greater than those of the strategic alternatives available to CBS, including remaining as a standalone company, given, among other things, the complementary nature of the CBS businesses with the Viacom businesses and the financial benefits, including synergies, to be realized from the combination of the two companies, and based in part on the fact that there were no other inquiries regarding an alternative potential strategic transaction with CBS even after widespread media reports that CBS was considering a strategic transaction;

 

   

the CBS special committee’s and the CBS board of directors’ belief that the merger will likely provide a number of significant strategic advantages and opportunities, including:

 

   

that the merger would provide ViacomCBS with a library of content with great breadth and depth across categories and would combine television and film rights for some of CBS’ and Viacom’s most popular franchises, resulting in significant potential for ViacomCBS to better leverage CBS’ and Viacom’s powerful consumer brands and intellectual property across different platforms and assets, including film, television, books, live events, recreation and consumer products;

 

   

that ViacomCBS would benefit from increased financial scale to pursue its growth strategy and drive significant and sustained investment in programming and innovation, underpinned by a strong balance sheet, robust cash flow generation and investment-grade credit rating;

 

   

the opportunities to expand into the demographics of Viacom’s consumer base and leverage Viacom’s global footprint to expedite international expansion, including global expansion of CBS’ direct-to-consumer offerings;

 

   

that the greater scale, financial resources and flexibility resulting from the merger (including the fact that ViacomCBS would be one of the leading content producers in the world) would enhance ViacomCBS’ ability to compete in the rapidly evolving media and entertainment landscape by encouraging innovation, generating more growth opportunities, increasing direct access to consumers and expanding ViacomCBS’ capability to produce premium and popular content;

 

   

that the merger will enhance CBS’ existing distribution and advertising partnerships and also allow ViacomCBS to form important new partnerships across a diverse and global customer base, including MVPDs, broadcast and cable networks, subscription and ad-supported streaming services, mobile providers and social platforms;

 

   

that the merger will accelerate CBS’ direct-to-consumer strategy by bringing together complementary SVOD and AVOD assets currently held by CBS and Viacom;

 

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that ViacomCBS will benefit from Viacom’s advanced advertising and content capabilities and be better positioned to pursue and expand advanced advertising technology across all of its assets beyond the AVOD strategies currently being implemented at CBS;

 

   

that the merger will yield $540 million in annualized run-rate cost synergies realized within 12-24 months of closing, and will be accretive to earnings per share in the first year after the closing;

 

   

the greater scale and expanded portfolio of services and appealing brands resulting from the merger and the other contemplated transactions (including because of ViacomCBS’ leading share of key U.S. demographics), which the CBS special committee and the CBS board of directors expect, among other things, would put ViacomCBS at a stronger bargaining position with its distributors;

 

   

the positive impact on strategic opportunities resulting from a larger asset and equity base to support incremental mergers and acquisitions or a potential sale of the company;

 

   

recent developments and trends in the media and entertainment industry and related industries, including the increasing importance of scale given the number and size of recent business combination transactions in the media industry and the accelerating rate of cord-cutting;

 

   

the CBS special committee’s and the CBS board of directors’ belief that the merger with Viacom was the best strategic transaction available to CBS given that potential acquisition opportunities available to CBS other than Viacom, while complementary, would not be large enough to resolve the concerns of the CBS board of directors and CBS management that CBS as a standalone company is operating on a sub-scale basis relative to its key competitors in the current industry landscape, and also given that potential acquirers of CBS are currently focused on integrating recently acquired businesses, such transactions are likely to be subject to significant regulatory scrutiny and/or have demonstrated a preference to expand content organically rather than through acquisitions;

 

   

the recommendation of CBS’ senior management in favor of the merger with Viacom;

 

   

the fact that the terms of the merger provide for Viacom stockholders to receive 0.59625 shares of ViacomCBS Class A common stock and ViacomCBS Class B common stock for each share of Viacom Class A common stock and Viacom Class B common stock, respectively, and for all CBS stockholders to retain their CBS common stock, and that, upon completion of the merger, CBS stockholders will own approximately 61% of the common stock of ViacomCBS (based on the outstanding shares of CBS common stock and Viacom common stock as of the date of the merger agreement), which will provide CBS stockholders with an opportunity to participate, proportionate to their ownership of ViacomCBS, in the equity value of ViacomCBS and the expected synergies resulting from the merger and the other contemplated transactions;

 

   

the benefits that CBS was able to obtain as a result of the CBS special committee’s negotiations with the Viacom special committee and discussions with NAI and the belief of the CBS special committee and the CBS board of directors that this was the most favorable exchange ratio to which the Viacom special committee would be willing to agree and the most favorable management and corporate governance arrangements to which the Viacom special committee and NAI would be willing to agree;

 

   

the management and corporate governance arrangements agreed to among the CBS special committee, the Viacom special committee and NAI that would provide for a strong management team drawn from both companies that would work together to integrate the two companies, to realize growth opportunities, to achieve synergistic benefits and to successfully implement strategies of ViacomCBS;

 

   

the fact that members of the CBS board of directors would continue to serve on the ViacomCBS board of directors, and the CBS special committee’s belief that a combined board of directors that is familiar with CBS’ business would be important to achieve the anticipated synergies;

 

   

the provisions in the merger agreement, the Governance Agreement and the organizational documents of ViacomCBS requiring the approval of at least a majority of the Unaffiliated Independent Directors

 

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then in office (including the approval of at least two of the Initial CBS Directors then in office and at least two of the Initial Viacom Directors then in office) for changes to the size or membership of the ViacomCBS board of directors or certain specified actions relating to the senior management team of ViacomCBS, in each case, for a specified period of time following the closing, which the CBS special committee believed would reasonably assure the continuity of management and oversight of ViacomCBS following the merger;

 

   

the CBS special committee’s and the CBS board of directors’ belief in the importance of retaining Mr. Ianniello in a key leadership position at ViacomCBS for a meaningful period of time following the closing in order to help enhance the value of ViacomCBS’ CBS assets and to provide a sense of continuity and stability for the CBS employees following the closing, and the CBS special committee’s and the CBS board of directors’ belief that the provisions in the organizational documents of ViacomCBS and Mr. Ianniello’s employment agreement would further these objectives;

 

   

the procedural safeguards and process implemented to enable the CBS special committee to determine the fairness of the proposed transaction for all of CBS’ stockholders (including such stockholders other than NAI), including that:

 

   

the CBS special committee consists of eight independent directors, each of whom is unaffiliated with NAI;

 

   

the CBS board of directors resolved that it would not approve a merger with Viacom unless the CBS special committee recommended it;

 

   

the CBS special committee was empowered to reject a transaction with Viacom if the CBS special committee determined to do so in its sole discretion;

 

   

the CBS special committee retained and was advised by its own independent, experienced, and qualified legal and financial advisors;

 

   

the CBS special committee requested and received a fairness opinion from each of Centerview and Lazard;

 

   

the terms and conditions of the merger agreement were determined through arm’s-length negotiation between the CBS special committee and the Viacom special committee and their respective representatives and advisors; and

 

   

the compensation of the members of the CBS special committee was in no way contingent on their approval of any transaction;

 

   

the frequency and extent of the CBS special committee’s deliberations, and its access to CBS’ management and advisors in connection with its evaluation of the proposed transaction;

 

   

the financial advice provided by Centerview and Lazard and the financial presentation and analysis of Centerview and Lazard, dated August 13, 2019, provided to the CBS special committee in connection with the rendering of their respective opinions, as more fully described below in the section entitled “—Opinions of the CBS Special Committee’s Financial Advisors”;

 

   

the opinions of Centerview and Lazard rendered to the CBS special committee on August 13, 2019, which were subsequently confirmed by delivery of separate written opinions dated as of such date, which opinions are included in this joint consent solicitation statement/prospectus as Annexes I and J, respectively, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview and Lazard in preparing their opinions, the exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to the holders of outstanding shares of CBS common stock (other than shares of CBS common stock held by a NAI Party or any other affiliate of CBS or Viacom and other than shares of CBS common stock held by CBS or any of its subsidiaries as treasury shares), as more fully described in the section entitled “—Opinions of the CBS Special Committee’s Financial Advisors”;

 

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the fact that the NAI Parties, who, as of August 13, 2019, collectively owned approximately 78.9% of the total issued and outstanding shares of CBS Class A common stock and approximately 79.8% of the total issued and outstanding shares of Viacom Class A common stock, will vote in favor of the merger, pursuant to the terms and conditions of the Support Agreement, as more fully described in the section entitled “Support Agreement”;