CBS sues controlling shareholder Redstone to stop Viacom merger plan


The New York media company has also asked the Delaware Chancery Court to block Redstone from interfering at a special meeting of its board on Thursday called to consider the merger.

Redstone indicated that she would see greater value in a Verizon bid for both CBS and Viacom - a position that some saw as chilling interest in a potential deal. Issuing the dividend would dilute National Amusement's holding of Class A voting shares in CBS from about 79 percent to 17 percent, reducing its control of the company. Redstone reportedly expressed her willingness to replace CBS directors to compel a merger with Viacom regardless of the Special Committee's process, deliberations, and conclusion'.

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.

It then lists a number of ways that Shari has allegedly abused her power to undermine the board and hijack control for herself and National Amusements.

National Amusements, the investment vehicle controlled by the Redstone Family, owns almost 80 percent of Class A voting shares.

"The dividend would not dilute the economic interests of any CBS stockholder", CBS said in a press release. The move would allow the company to "more fully evaluate strategic alternatives".

National Amusements, which controls CBS and Viacom, has been trying to merge the two companies. With Monday's Closing Bell on Wall Street, CBS shares were up $1.14 to $53.66 - their highest close since April 4.

The agreed upon price was a ratio of 0.6135 CBS shares for every Viacom class B share.

Redstone has said that she would like CBS Chief Executive Leslie Moonves to serve as chief executive of the combined company for at least two years.

National Amusements said it was "outraged" by the lawsuit and "strongly refutes [CBS'] characterization of recent events".