Westinghouse may offer $5.8 billion bid for CBS


NEW YORK -- Westinghouse Electric Co. has indicated to CBS Chairman Laurence A. Tisch that it is interested in buying the company for about $80 a share, or about $5.8 billion in cash, two people with knowledge of the talks said yesterday.

Shares of CBS Inc. surged after Dan Dorfman said on the CNBC financial news cable channel that Westinghouse was planning to offer $83 a share for CBS. The stock closed up $4.125, or 6 percent, at $69.75, on a trading volume more than three times its daily average during the last three months. Both CBS and Westinghouse declined to comment.

Despite Wall Street's enthusiasm, it is not clear whether Westinghouse, which already is highly leveraged, can raise the necessary financing. The company has been working with Chemical Bank and J.P. Morgan to put up the funds, the two sources said, but until that money is actually available, Westinghouse cannot make a bid.

Although Mr. Tisch has said repeatedly that CBS is not for sale, he is believed to be willing to accept $80 a share, but not less.

A deal by Westinghouse has its logic. Westinghouse has five television stations in major markets, all of which are CBS affiliates. Through an agreement with CBS, the company will increase the number of television stations under its management to eight. That agreement, by merging the two companies' sales organizations under Westinghouse's leadership, is expected to create one of the largest sales organizations in the country.

Westinghouse stock closed down 12.5 cents at $13.75.

While CBS' profits fell about 50 percent in the current year's second quarter, overall the company is healthy, with relatively little debt. On the other hand, Westinghouse has $1.8 billion in debt on continuing operations as well as $800 million from a bank credit line.

Nevertheless, several analysts said yesterday that Westinghouse might be able to raise interim financing if it agreed to sell assets after a buyout. And part of the borrowing could be done against CBS' own assets, one analyst noted.

For troubled Westinghouse, a merger with CBS would enhance its strongest business, broadcasting. The company has been trying to reduce its high debt level by selling assets over the last five years.

Westinghouse also has its Electronic Systems Group, based in Linthicum, and a host of other operations, some of which presumably could be sold.

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