CBS Sues Controlling Shareholder National Amusements, Accuses Shari Redstone Of Undermining Board

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According to reports, CBS has always been reluctant to do the deal, first starting in 2016, when Redstone initially pushed the idea. During the course of the special committee's negotiations regarding a possible merger, the suit alleges that Ms. Redstone refused to agree to typical public company governance or submit any potential transaction to a vote of all of the unaffiliated public stockholders of CBS.

If the dividend is approved, National Amusements' voting rights in CBS would shrink to about 17 percent from about 80 percent, more in line with National Amusements' economic stake in CBS of 10.3 percent, according to CBS's lawsuit, filed with the Court of Chancery in Delaware.

CBS and a special committee of its board of directors on May 14 sued controlling owner National Amusements.

CBS has requested a temporary restraining order to prevent Redstone from interfering with a special meeting of the company's board directors on Thursday, at which CBS plans to propose a Class A common stock dividend that would dilute Redstone's National Amusements' voting interest from approximately 79 to 17 percent.

National Amusements responded by saying it was "outraged" by the CBS lawsuit and its characterization of recent events.

The process of diluting the control of National Amusements and thus both Redstones was also addressed in a release sent out by CBS on Monday.

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'Ms. Redstone has acted to undermine CBS's highly lauded and successful management team in a series of escalating attacks, including by talking to potential CEO replacements without Board approval and deriding executives, ' declares another.

On Monday CBS asked a DE court for a temporary restraining order that would prevent the Redstones from exerting their influence and allow the board to vote through a measure that would mute the Redstone holding.

Shares of CBS were up more than 3 percent in morning trade on May 14 while Viacom shares declined almost 7 percent.

The network suit is an effort to stop Shari Redstone from copying her father's 2016 gambit to reassert control over the Viacom board once questions arose about whether the billionaire's mental capabilities were waning.

Indeed, CBS shareholders appear to be more content without the weight of a relaunched Viacom to worry about.

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