UPDATE 5/14/18 11:15AM: CBS Corp. has declared war on its controlling shareholder, suing Shari Redstone and her family’s National Amusements Inc. holding company for trying to force CBS to merge with Viacom Inc.
The special committee, which was formed to evaluate a potential merger, said it has decided that the proposed Viacom deal isn’t in the best interesting of CBS shareholders and says Ms. Redstone poses “a serious threat of imminent, irreparable harm” to public stockholders.
National Amusements controls CBS through a dual-class stock structure that gives National Amusements 80% voting power despite having a much smaller economic stake. CBS said it has scheduled a board meeting for this Thursday to consider issuing a dividend of voting Class A shares to all stockholders that would reduce National Amusements’ voting power to only 17% from its current 80%.
CBS is seeking a temporary restraining order to block Ms. Redstone of making any changes to the board before Thursday’s meeting.
CBS Corporation and the Special Committee of its Board of Directors, today filed a lawsuit in Delaware Court of Chancery alleging breaches of fiduciary duty by National Amusements, Inc., and seeking to prevent it from interfering with a special meeting of the Board of Directors, at which meeting the directors will consider declaring a dividend of shares of Class A common stock to all of the Company’s Class A and Class B stockholders, as is permitted under CBS’s charter.
The dividend, if issued, would dilute National Amusements, Inc.’s voting interest from approximately 79% to 17%. The dividend would not dilute the economic interests of any CBS stockholder. The Special Committee has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders’ interests and would unlock significant stockholder value.
If consummated, the dividend would enable the Company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives. Copies of the filings made today in connection with the pending litigation will be made available at the investor relations section of the CBS website.