Mike Snider of USA Today had the news:
The suit, filed in Delaware Chancery Court, alleges Redstone, her family and the company have breached their “fiduciary duties by abusing their control to threaten the independent corporate governance of CBS” and “force through” a merger with Viacom at “any cost.”
Privately held theater chain company National Amusements Inc., controlled by Shari Redstone and her family, owns 80% of the voting stock of Viacom and CBS. However, under CBS’ dual-class stock structure, National Amusements owns only 10% of the economic interest, the CBS court filing says.
But CBS, in its restraining order also filed Monday, says it plans to hold a special meeting Thursday — a day before the company’s scheduled annual shareholders meeting — to consider issuing a special stock dividend that would dilute Redstone and National Amusement’s voting power from 80% to about 17%. The action would be taken, the filing says, “in order to protect the long-term interests of CBS’s stockholders going forward.”
CBS argues the action is needed because Redstone has sought to undermine CBS’ management and has said she would replace company board members with those who would “compel a merger with Viacom,” the court filing says.
Peter Kafka and Edmund Lee of Recode reported that National Amusements expressed “outrage” at the lawsuit:
Even if CBS and Viacom somehow sort out a deal, the unprecedented move on the part of Moonves tells us it will become harder for him to remain a part of such a combined company. If, however, he succeeds in curtailing Redstone’s power, he’ll be an independent CEO and can he sell CBS to someone else.
In a statement, Redstone’s family company, National Amusements, said it was “outraged” by the suit and “strongly refutes its characterization of recent events.”
Redstone’s company went on to suggest the suit was prompted by concerns it raised about a CBS board director and “incidents of bullying and intimidation…dating back to 2016,” the statement read. The company didn’t cite the specific board member.
Trey Williams of The Wrap reported that Viacom’s shares dropped while CBS shares rose on the news:
CBS shares rose more than 4 percent after the news of the suit. In the last year, CBS shares of declined nearly 12 percent.
Viacom, as its tried to turn its business around, has seen shares drop more than 16 percent in the last 12 months.
CBS is arguing that by trying to force the two companies together, Redstone and National Amusements has failed to meet its fiduciary duty to shareholders.
The special committee CBS formed to explore the potential merger decided over the weekend, after a public back-and-forth with Viacom and National Amusements, that a deal would not be in the best interest of CBS and its shareholders.
Former CoinDesk editorial staffer Michael McSweeney writes about the recent happenings at the cryptocurrency news site, where…
Manas Pratap Singh, finance editor for LinkedIn News Europe, has left for a new opportunity…
Washington Post executive editor Matt Murray sent out the following on Friday: Dear All, Over the last…
The Financial Times has hired Barbara Moens to cover competition and tech in Brussels. She will start…
CNBC.com deputy technology editor Todd Haselton is leaving the news organization for a job at The Verge.…
Note from CNBC Business News senior vice president Dan Colarusso: After more than 27 years…