CBS Corp. Files Suit Against Shari Redstone & National Amusements

CBS declares war on Shari Redstone over Viacom merger

In a plan that would radically dilute Redstone's stake in the company from 79% to 17% (and her influence over merger negotiations), CBS is planning to hold a special shareholder meeting on Thursday to approve a dividend declaration.

"The Redstones have made it clear they would like to see CBS merge with Viacom". At the meeting, the committee is set to consider issuing a special dividend to all shareholders that would neutralize Ms. Redstone's special voting powers.

In its lawsuit, CBS said that its stock has fallen from almost $70 to around $50 in the last several months-an approximately $7 billion loss in market cap born by Class B stockholders.

National Amusements, in response, said it strongly refutes CBS's "characterization of recent events".

Shari Redstone sits on the boards of CBS and Viacom, and is the president of National Amusements, the movie theater chain through which her family controls those two media companies.

"Ms. Redstone has acted to undermine the management team, including, without board authority, talking to potential CEO replacements, deriding the chief operating officer and threatening to change the board", CBS officials said in the suit, filed in Delaware Chancery Court.

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In a remarkable twist, it's the special committee of board members - the committee Redstone wanted - that is suing.

Verizon had expressed interest in acquiring CBS before merger talks heated up with its corporate sibling Viacom, sources say.

"This precipitous lawsuit, and the efforts of CBS management and its "independent" directors to wrest voting control from NAI, are outrageous", National Amusements said.

CBS is suing National Amusements, the media company's majority shareholder, alleging that it is violating its fiduciary duty to investors by pushing for a merger with Viacom.

The lawsuit came at the beginning of a big week for CBS. "NAI's conduct throughout supports this, and reflects its commitment to a well-governed process", National Amusements said in a statement.

National Amusements says it is "outraged" and has no intention of forcing a deal not supported by both companies. "We intend to defend our position vigorously and look forward to presenting our arguments in court".

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