CBS sues to head off Redstone's family

16 May, 2018, 00:52 | Author: Arnold Perez
  • Courting Sumner Redstone and his daughter Shari are being sued by CBS Corporation for trying to push through a merger with Viacom that was rejected by the board

The lawsuit filed Monday accuses Ms. Redstone of breaching her fiduciary duty to CBS shareholders by pressing for a merger of the companies against the wishes of CBS board members.

Redstone reportedly wanted Viacom's CEO Bob Bakish to take the reigns as COO of a combined Viacom-CBS, while Moonves was pushing for current COO, Joe Ianniello. The dividend would not dilute the economic interests of any CBS stockholder, ' states the release.

Redstone, daughter of retired Viacom mogul Sumner Redstone, wants CBS and sister media company Viacom to merge - a move that CBS CEO Leslie Moonves and the CBS board of directors have had reservations about.

National Amusements controls a similar share of the vote at Viacom.

The CBS board is considering issuing a dividend from Class A stock to shareholders across Classes A and B to dilute National Amusements' voting interest from 79 percent to about 17 percent.

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The lawsuit was pre-emptive, CBS said, because Ms. Redstone had considered replacing CBS's board if it continued to resist a merger with Viacom.

Viacom and CBS first split in 2006, and the recent lawsuit comes after months of talks between the two about a potential remerger. Viacom's investors would receive 0.6135 CBS shares for each Viacom share they own, according to a person familiar with the matter who was not authorized to discuss the negotiations.

The Redstone family booted Viacom CEO Philippe Dauman off the board along with four other directors so the controlling shareholder could change Viacom's management, which the Redstones blamed for the company's declining stock price at the time.

CBS accused Redstone of interfering with the CBS board nomination process, of undermining CBS' management team and blocking another unnamed acquisition partner from pursuing a deal with CBS.

National Amusements says it is "outraged" and has no intention of forcing a deal not supported by both companies. After a year and a half of resisting National Amusements's entreaties to pair up the businesses, CBS made a decision to challenge its controlling shareholder - a move that could give its leadership greater power to merge with other companies.

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