ViacomCBS Offloads Publishing Business For $2.2B; Street Sees 10% Downside

ViacomCBS announced on Wednesday that it has signed a definitive agreement to sell its book publishing business, Simon & Schuster, to Penguin Random House LLC in an all-cash deal worth $2.175 billion.

ViacomCBS (VIAC) revealed that asset divestment is a part of its strategy to move away from non-core businesses. The diversified multinational mass media conglomerate intends to use the proceeds for investment in growth strategies, debt repayments, and dividend payments to shareholders. The transaction is expected to close next year.

According to ViacomCBS, “LionTree Advisors is acting as the exclusive financial advisor and Shearman & Sterling LLP is acting as legal advisor to ViacomCBS in this transaction.” (See VIAC stock analysis on TipRanks).

On Nov. 16, Rosenblatt Securities analyst Bernie McTernan raised the stock’s price target to $30 (13.8% downside potential) from $28 but maintained a Hold rating. In a note to investors, McTernan wrote, “While we like the company’s multi-pronged distribution points in streaming, over the medium term we have concerns over balancing share gains with their own stream services and licensing to third parties.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 8 Holds. The average price target stands at $31.25 and implies downside potential of about 10.3% to current levels. Shares are down by about 17% year-to-date.

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Amit Singh
Amit Singh has over eight years of strong experience (both sell-side and buy-side) in analyzing financial reports and filings as well as identifying strategic investment opportunities. Over the years, Amit has covered various industries and geographies, with a primary focus on consumer staples and the consumer discretionary sector. Amit’s background spans evaluating company portfolios, building complex financial models, writing financial articles, and identifying the overall financial worth of companies. He has a post-graduate diploma in finance.