CBS Corp. took the final step in the spinoff of its billboard business following CBS Outdoor Americas' initial public offering in March, with a plan to fully divest its 81% ownership.

The exchange offer is expected to be tax-free for shareholders in the U.S., New York-based CBS, owner of the most-watched TV network, said today in a statement.

After the split, CBS Outdoor intends to convert into a real estate investment trust, or REIT. In March, the company raised $560 million in an IPO and said the proceeds would help complete the conversion. At the time, CBS Outdoor CEO Jeremy Male said the company would seek to buy smaller U.S. billboard companies.

By splitting off from CBS and becoming a REIT, the business will have the ability to buy competitors in the 25 biggest U.S. markets and convert more locations to more-profitable electronic signs, Mr. Male said in March.

REITs have become a popular tool for companies to lower taxes and improve returns for investors. REITs don't pay federal income taxes and are required to distribute at least 90% of taxable earnings as dividends.

CBS Outdoor will compete with Lamar Advertising and Clear Channel Outdoor and put a priority on digital billboards.

Outdoor profits
CBS Outdoor, which has gained 15% since the IPO, fell 0.3% to $32.06 at the close in the New York yesterday. CBS added 0.6% to $61.13.

Under the terms of the exchange, shareholders will be able to exchange CBS Class B common stock for shares of CBS Outdoor common stock at a 7% discount, according to the statement today.

For 2013, CBS Outdoor said net income increased 27% to $143.5 million on revenue that was little changed at $1.29 billion. Outdoor contributed about 8.5% of CBS's revenue and 7.5% of operating profit.

After the share exchange, CBS CEO Les Moonves and other executives have said they plan to step down from the board of CBS Outdoor, which will rename itself. The New York-based company will have about 2,500 employees worldwide.

~ Bloomberg News ~