2014-03-28 11:01 PM
NEW YORK (AP) -- CBS Outdoor's stock is surging Friday in its debut on the New York Stock Exchange.
Shares of the outdoor advertising subsidiary of CBS Corp. gained $2.02, or 7.2 percent, to $30.02 in morning trading after peaking at $30.47 earlier in the day.
CBS Outdoor Americas Inc.'s initial public offering includes 20 million shares priced at $28 per share. That's at the high end of the expected range of $26 to $28 per share.
The New York company raised $560 million in the IPO.
At the IPO price, CBS Outdoor's market value would be approximately $3.36 billion. There would be 120 million shares outstanding after the offering. The New York-based company is giving the underwriters a 30-day option to buy an additional 3 million shares if demand is strong.
CBS Outdoor said in a regulatory filing that it had approximately 330,000 displays available for advertising in the U.S. and about 26,200 displays across Canada and Latin America as of 2013's end. Its customers include Apple Inc. and McDonald's Corp.
The company is trying to keep pace with the times, converting traditional billboard displays to digital ones. At the end of last year the company had 373 digital billboards in the U.S.
CBS Outdoor said in its filing that digital billboards produce about three to four times more revenue per display than traditional billboards, on average. The company is ramping up its efforts to convert more of its traditional billboards to digital billboards as conversion costs decline.
Once the offering is complete, CBS will own more than 80 percent of CBS Outdoor. CBS plans to divest its shares of CBS Outdoor through a split-off later this year. Once that happens, CBS Outdoor said it plans to convert to a real estate investment trust. CBS announced REIT conversion plans for the subsidiary in January 2013.
REITs return 90 percent of their profits to shareholders and don't have to pay taxes on those profits.
CBS Outdoor said it plans to use the offering's proceeds in part for the cash portion of the distribution to shareholders required in its REIT conversion.
In 2013, CBS Outdoor reported $1.29 billion in revenue. That's up slightly from $1.28 billion in the previous year.
CBS Outdoor is trading under the "CBSO" ticker symbol. The offering is targeted to close on April 2.