Management Offers to Buy Viacom Stock

Viacom International Inc., a leading broadcasting and cable television concern, said today it received a $2.7-billion buy-out offer from a group led by Viacom’s management.

Viacom owns five TV stations and eight radio stations, operates cable TV systems serving about 840,000 subscribers and owns two major cable-programming companies, Showtime-The Movie Channel and MTV Networks.

The company also distributes syndicated television programs, including reruns of “The Honeymooners,” and it has acquired the worldwide distribution rights to the current NBC hit program “The Cosby Show.”

Viacom said the acquisition proposal was made by a group that includes Terrence A. Elkes, Viacom’s president and chief executive, and other members of senior management; the investment firms Donaldson, Lufkin & Jenrette Securities Corp., First Boston Corp. and Drexel Burnham Lambert Inc., and the insurance company Equitable Life Assurance Society of the U.S.

Buy-Out Formula

Under the proposal, the group would buy each of Viacom’s 53.4 million common shares and equivalents for $37 cash and a fractional share of a preferred stock designed to have a market value of $3.50.

Viacom’s common stock closed at $35.25 in New York Stock Exchange composite trading Monday.

The purchase also would involve the group’s refinancing of existing Viacom debt, which would lift the transaction’s total value to about $2.7 billion, Viacom said.

The proposal, which will be evaluated by a committee of Viacom’s outside directors, is subject to approval by the full board and by Viacom’s shareholders.

Viacom, which was started in 1971 as a divested asset of CBS Inc., frequently has been the target of takeover speculation.