CBS Sues To Ice Viacom Reunification


The suit alleges that Redstone has "improperly interjected herself into negotiations" about the merger and has "acted to undermine CBS's highly lauded and successful management team in a series of escalating attacks".

CBS Corporation filed a lawsuit in Delaware Chancery Court on Monday accusing chairman emeritus Sumner Redstone and his daughter, majority shareholder Shari Redstone, of "breaching their fiduciary duties" to stockholders.

Today, it is the controlling shareholder of both CBS and Viacom.

The two companies previously explored a merger in 2016 at the urging of Shari and Sumner Redstone, who believe a deal is needed for the two smaller media companies to compete with growing internet powers Netflix Inc and pushing deeper into the media business.

After a year and a half of resisting National Amusements's entreaties to pair up the businesses, CBS chose to challenge its controlling shareholder - a move that could give its leadership greater power to merge with other companies. Analysts have said a merger would benefit Viacom more than the stronger CBS.

CBS Corp. essentially declared war on Shari Redstone on Monday, filing a lawsuit meant to thwart her effort to push through a merger of CBS and Viacom Inc. Concurrently, Viacom's Class B shares slumped $1.48 to $28.74 - bringing the company's shares back to where they were in late November 2017.

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The move would effectively prevent National Amusements from replacing board members to advance the Viacom deal and would instead allow CBS to operate as an independent, non-controlled company free to weigh strategic alternatives.

CBS is seeking to call a special board meeting on May 17 at which directors will consider declaring a dividend of shares of Class A common stock to all the company's Class A and Class B shareholders.

The companies have been in discussions about a merger since February but talks stalled over the price and who will sit on the combined board of directors.

It said that its 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".

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.