Shares of CBS surged on Thursday, as investors cheered news that the media company was converting its outdoor advertising business to a real estate investment trust, while divesting itself of its international portfolio.
As part of the plan, the company will convert the North and South American operation into a REIT while selling its European and Asian outdoor businesses. The move comes on the heels of protracted speculation that CBS was interested in extricating itself from the sector, which sells billboards and ads in public spaces.
CBS, which itself was spun off from media giant Viacom back in 2005, said in a statement that it plans to submit a request for a private letter ruling to the Internal Revenue Service sometime this quarter. If the request is granted, it will complete the REIT conversion by 2014.
In early trading on the New York Stock Exchange, CBS's shares jumped more than 10 percent, trading just below $42.
"We believe the moves we are announcing today will unlock the tremendous value of these unique quality assets," said CBS' chief executive, Leslie Moonves, in a statement on Wednesday.
The company did not set a timetable for the sale of its outdoor advertising business in Europe and Asia. It follows a similar move made by billboard operator Lamar Advertising in August.
REITs return 90 percent of their profits to shareholders. By spinning the outdoor business into the new structure, CBS is betting that the business will be valued at a higher multiple of earnings than its core business of TV and radio broadcasting. It wasn't immediately clear how much of the REIT that CBS would continue to own.
—The Associated Press contributed to this report.