After months of hearing how CBS and Viacom have been moving closer to a merger today there is a bump in that road. Today CBS sued their own Vice Chair and Majority Shareholder Shari Redstone in an effort to block that merger.
CBS is calling for a special board meeting on Thursday to vote on a proposal to issue a special stock dividend that would dilute the preferred voting power that Shari Redstone and the National Amusements holds in CBS from 79.6% to about 17%. This would block Redstones ability to replace board members.
“The Special Committee believes that once Ms. Redstone learns of this determination, she could assert her power, as she did at Viacom, to immediately replace members of the Board and use the new directors to force through the merger on terms favorable to herself and NAI but harmful to CBS — a merger the Special Committee determined is not in the best interests of the Company—and make other changes to the CBS organizational documents that will adversely impact the ability of the CBS Board to exercise its fiduciary duties and protect CBS stockholders,” the suit states.
This is a stunning flip from all earlier reports that CBS and Viacom had been close to a deal. Now it seems like as far as CBS board directors think the deal is dead.
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