CBS Outdoor Scores Bigtime With Its IPO

Gail Chiasson, North American Editor

CBS Outdoor Americas Inc.‘s initial public offering last Friday, a spinoff from CBS Corp., exceeded analyst expectations, with the stock rising 7.5% from the IPO price of $28 to $30.10 as trading opened in the morning, before settling to $29.50 when trading closed, for a 5.3% increase by the end of the day.

CBS Corp. is holding onto the majority of stock in CBS Outdoor as a publicly traded company, with 83% of shares remaining with the corporate parent. CBS Outdoor Americas said it priced its initial public offering at $28 per share, valuing the outdoor advertising company at about $3.36 billion.

The IPO sold 20 million shares in CBS Outdoor, raising approximately $560 million for the new company. It appears that the strong showing reflected investors’ belief that out-of-home ad revenues will continue to grow, thanks to digital billboards and growing skepticism about other traditional media which face disruption by ad-skipping technologies.

Jeremy Male, CBS Outdoor CEO, says that he plans to increase the company’s current network of 400 digital billboards by about 100 per year.

Funds raised in the IPO will be used to finance CBS Outdoor’s conversion into a real estate investment trust – a corporate structure that should allow the company to avoid most federal income tax, as long as it pays out 90% or more of its earnings in the form of dividends to shareholders. CBS Outdoor revealed In an earlier filing that it will pay shareholders a dividend of $0.37 per share per quarter after the REIT conversion.

The company’s shares started trading last Friday on the New York Stock Exchange under the symbol ‘CBSO’. CBS Outdoor’s net income rose 27% to $143.5 million on revenue of $1.29 billion for the year 2013.

Last July, CBS Outdoor sold off its international division, including all its overseas properties except the Americas, to Platinum Equity for $225 million.


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