By Greg Roumeliotis and Jessica Toonkel
April 4 (Reuters) - Viacom Inc is preparing acounterproposal to CBS Corp's first share exchange offerof 0.55 CBS share for every Viacom share, which Viacom found tobe inadequate, people familiar with the matter said onWednesday.
The CBS offer, which was communicated verbally last Friday,valued Viacom at below its market value of around
Viacom has not yet decided on the exact share exchange ratioit will ask for, but is expected to seek more than 0.62 CBSshare for every Viacom share, one of the sources said. Viacom'scounterproposal is expected by Thursday, another of the sourcesadded.
Viacom will argue that potential cost synergies of more than
National Amusements Inc, the controlling shareholder of CBSand Viacom, wants Viacom CEO Robert Bakish to be No. 2 in thecombined company, the sources said. But CBS CEO Les Moonves, whohas offered to run the combined company, wants CBS ChiefOperating Officer Joseph Ianniello as No. 2, the sources added.
The sources asked not to be identified because thenegotiations are confidential. CBS and Viacom did notimmediately respond to requests for comment. CNBC first reportedthat Viacom had dismissed CBS's offer.
Viacom shares were up nearly 1 percent at
CBS and Viacom set up special committees to explore themerger in February, a move to reunite the companies split bycontrolling shareholder Sumner Redstone more than a decade ago.
The two companies explored a merger in 2016 instigated bythe Redstone family, but those talks ended unsuccessfully, dueto concerns by CBS about price and governance issues.
Since then, Bakish has taken a number of steps to boost thecompany's performance, including improving relations with cableand satellite companies, causing some analysts to expect CBS toacquire Viacom at a premium.
Many of Viacom and CBS's competitors are merging as scalebecomes increasingly important in the media landscape, with morecustomers cancelling pricey cable contracts, and Netflix Incand Amazon.com Inc spending billions ofdollars on making shows and movies.
Walt Disney Co announced in December it would buythe majority of Twenty-First Century Fox Inc's assets.Discovery Communications recently bought ScrippsNetworks Interactive Inc.(Reporting by Greg Roumeliotis and Jessica Toonkel in