CBS Sues Controlling Shareholder for Independence

CBS Corp. May 14 filed a lawsuit in Delaware Court of Chancery alleging breaches of fiduciary duty by majority shareholder National Amusements, which is run by Sumner Redstone and his daughter Shari Redstone.

CBS is seeking to prevent the Redstones from allegedly interfering with a special meeting of its board of directors to consider declaring a dividend of shares that would dilute the value of National Amusements’ voting rights to 17% from 80% — as is permitted under CBS’s charter.

The dividend would not dilute National Amusements’ economic interests, or any other CBS stockholder.

CBS said it took this step because it believes it is in the best interests of all its shareholders, and necessary to unlock significant stockholder value.

If consummated, the dividend would enable CBS to operate as an independent, non-controlled company and more fully evaluate strategic alternatives — including merging with Redstone-controlled Viacom.

CBS contends that without the litigation National Amusements would seek to oust its board members and/or change its bylaws — allegations National Amusements denies.

“National Amusements had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies,” the company said in a statement. “National Amusements’ conduct throughout supports this and reflects its commitment to a well-governed process.”

 

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