Westinghouse Reportedly Close to $5-Billion Deal to Buy CBS : Acquisitions: A bid could come as early as Sunday, sources say. Details on financing remain unclear.

Westinghouse Electric Co. is in the final stages of negotiations with CBS Inc. to buy the network and could make a formal bid as early as Sunday, according to sources close to the talks.

On Friday, however, it was still unclear whether Westinghouse had assembled all the financing needed to make a bid.

The company has lined up $2 billion in lending from J.P. Morgan and Chemical Bank, but it is trying to assemble another $3 billion, possibly by borrowing against a later asset sale. The company’s defense electronics and mobile refrigeration equipment unit are thought to be likely candidates for sale because they are healthy.

On Friday, sources speculated that CBS’ radio group might be the easiest to sell because rules restricting broadcasting ownership are expected to be relaxed this fall, which would fuel consolidation in the industry. Westinghouse might be able to fetch $600 million to $1 billion by selling CBS’ 21 radio stations to an acquisitive company such as Infinity Broadcasting Corp., the nation’s largest radio broadcaster, with 27 radio stations. Westinghouse presumably would keep its own group of 18 radio stations.

Westinghouse and CBS met Friday in New York to negotiate the terms of such a deal. The $80-a-share price demanded by Laurence A. Tisch, CBS’ chairman and 20% owner, is apparently not a sticking point, according to people close to the negotiations, who characterized them as cordial, orderly and professional.

On Wall Street, CBS shares closed at $75.25, up 37.5 cents, what investors say is as high as they will go based on an $80 price. That price would put the value of the sale at $5 billion.

Although many parties interested in buying the network believe it is overvalued at that price, Westinghouse is apparently willing to pay generously to head off a bidding war--and because broadcasting has become central to its revival strategy.

If a bid is made by Sunday, the CBS board could conceivably approve it the same day, although the deal would also require the assent of shareholders and the blessing of the Federal Communications Commission, which could be a bigger hurdle.

Any transfer of broadcast licenses must be approved by the FCC. The merger might be problematic in that federal laws restrict any entity from owning more than 12 stations or exceeding a reach of 25% of the nation’s television viewers. Together, CBS and Westinghouse own 15 television stations that reach 32% of American viewers.

Westinghouse would have to submit a station-divesting plan to the FCC, and the company would probably ask for a temporary waiver to give it time to comply. Such waivers are not uncommon and are usually granted for 12 to 18 months.

But Westinghouse is probably counting on the waiver becoming a moot point. Congress is expected to approve a telecommunications reform bill that would allow the reach to extend to 35% by a single owner, and perhaps to as much as 50%. That legislation would also eliminate rules that restrict broadcasters from owning more than 20 AM and 40 FM radio stations nationwide.

However, the measure is not expected to be passed until fall, and certain provisions could be phased in over time.

Waiting for FCC approval, however, could give another bidder a window of time in which to make a counteroffer. Most sources do not expect a new bidder to surface, especially at a price of $80 a share.

But one investor said that if Walt Disney Co. decided to enter the fray, it might sell off the CBS radio stations to Westinghouse to reduce the cost, and it could possibly offer a slightly lower price because it would not present the regulatory complication.