CBS Outdoor Goes Public Ahead of REIT Conversion

NEW YORK CITY—Shares of CBS Outdoor Americas Inc. began trading on the New York Stock Exchange Friday after CBS Corp.'s outdoor advertising arm's initial public offering priced at the high end of its $26 to $28 range. CBS continues to control more than 80% of CBS Outdoor, but will divest its shares later this year, after which CBS Outdoor plans to convert to a REIT.

The newly public company, which is now trading under the CBSO ticker, said it raised $560 million in its IPO. The IPO values CBS Outdoor at $3.36 billion.

For parent CBS Corp., the CBS Outdoor IPO corrects what the New York Times characterized as “an awkward fit” for a company best known as a television network. “As much as we like that business, we are really a content company—that's where our future is and our growth is,” Leslie Moonves, chief executive of CBS, told the Times Thursday. “Outdoor doesn't quite fit with us because it's sales, but not content. The synergies didn't really exist.”

Along with REIT conversion, CBS Outdoor's future plans include buying up smaller competitors. Independent operators account for 36% of the industry, Bloomberg reported, with CBS Outdoor and rivals Clear Channel Outdoor Holdings Inc. and Lamar Advertising Co. each having approximately 20% market share.

Lamar in January noted in an SEC filing that its own plans for REIT conversion were uncertain. On Jan. 2, the IRS included the classification of outdoor advertising displays for REIT qualification purposes in a list of provisions for which the agency will not issue letter rulings or determination letters, Lamar said in a Jan. 7 SEC filing. In its final prospectus, filed with the SEC on Friday, CBS Outdoor cited IRS policy as well as legislative actions as potential stumbling blocks on the road toward REIT status.