CBS Corporation has filed a lawsuit to stop a merger of CBS and Viacom, Inc.
CBS “seeks 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.”
Shari Redstone, who wants the merger between the two companies, is accused of “breaching her fiduciary duty to CBS shareholders in her pursuit of a CBS-Viacom merger.”
“Ms. Redstone, through her recently-obtained domination and control of [National Amusements], has taken actions over the past two years that have led the Special Committee to conclude that she presents a significant threat of irreparable and irreversible harm to the Company and its stockholders,” said the lawsuit, filed Monday in Chancery Court in Delaware.
National Amusements said it was “outraged” by the lawsuit and “strongly refutes [CBS‘] characterization of recent events.” It had “absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies.”
The judge will “undoubtedly” grant that temporary restraining order, said C. Kerry Fields, a professor of business law and ethics at the USC Marshall School of Business. “Judges typically are sympathetic to applications for temporary restraining orders when there is a matter of great seriousness that might be upset if this injunction isn’t put in place.”
Fields believes that CBS will prevail in the lawsuit and that the merger will not take place.
Source: Los Angeles Times