Investors May Be the Losers in CBS-Redstone Feud

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The suit seeks to push through the issue of a stock dividend that would dilute National Amusements' voting interest from about 79 percent to 17 percent, CBS said in a statement.

CBS is "at least sending the signal and creating evidence they had the best interests of everyone in mind, and not (Shari Redstone)", said Brian Quinn, a professor at the Boston College Law School.

CBS Corp. on Monday asked a court to block controlling shareholder Shari Redstone from interfering at a special meeting of its board called to consider a merger with Viacom.

The company is seeking a temporary restraining order to prevent Redstone and National Amusements Inc. - the Redstone family investment vehicle that is the controlling stockholder of both CBS and Viacom - from trying to change CBS' board members or governance documents before the board can meet Thursday and work to dilute the Redstones' control over the company.

National Amusements denied it had any plan to oust CBS's board. CBS alleges that Redstone shooed away an interested buyer, reportedly Verizon Communications Inc.

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' conduct throughout supports this, and reflects its commitment to a well-governed process".

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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. The stock decreased 4.90% or $1.48 during the last trading session, reaching $28.74.

Viacom has made it no secret that it wants Moonves at the helm of a combined company, but the talks between the two have hit an impasse regarding the line of succession.

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.

The undisclosed party is USA wireless carrier Verizon Communications Inc, according to two sources familiar with the situation who requested anonymity to disclose confidential details.

CBS's lawsuit also said Redstone rejected an approach by an unnamed potential acquirer of CBS, citing that as another reason her interests are not aligned with other CBS shareholders. "With the expectation that the Redstones may attempt to interfere with the planned meeting, CBS in a preemptive measure is demanding a temporary restraining order from a DE judge".