CBS board votes to strip Redstones' voting control of company

Lloyd Doyle
May 18, 2018

The cheek of CBS CEO Leslie Moonves knows no bounds - he is now playing a game of chicken with one of his major shareholders, Shari Redstone through her control of National Amusements, and seeing who is first to blink.

CBS will postpone its annual meeting, which was set for tomorrow, in the midst of the legal drama.

National Amusements has denied the claim by CBS that it was seeking to force a merger with Viacom. "As Your Honor said, full on, all out, wipe away, dilute, take away the control".

NAI on Wednesday, however, amended the company's bylaws to require a supermajority of 90 percent to approve the issuance of a special dividend. "In light of the board's action today, that action was plainly necessary, and it is valid". The media titan can not speak, and his daughter has taken control over the company holdings - and driven the move to merge CBS and Viacom.

The vote was unanimous among directors unaffiliated with National Amusements.

If the board strips Redstone's controlling stake, CBS and Captain Moonves will be free to woo new suitors in place of Viacom.

He issued a temporary restraining order and said he would issue a ruling before Thursday's board meeting. Finally, Pivotal Research restated a "hold" rating and issued a $64.00 target price (up previously from $62.00) on shares of CBS in a report on Tuesday, January 9th. The rating was maintained by Benchmark with "Buy" on Tuesday, May 3.

If CBS does not recognize the change - and proceeds with its dividend vote - it could set the stage for an even more acrimonious court showdown, this time over NAI's ability to change the by-laws.

Mackay Shields LLC Invests $3.01 Million in CBS Co. (CBS)
Judge rules in favor of Redstone family

NAI called CBS' dividend scheme an effort to deprive a shareholder of its fundamental voting rights. CBS decided earlier this week that a recombination with Viacom, from which is officially split in 2005, would not be in the best interest of its shareholders. The Redstones own about 10 percent of CBS.

Members of the CBS board filed a lawsuit against Redstone and her holding company, National Amusements, on Monday.

"NAI believes the irresponsible action taken by CBS and its special committee put in motion a chain of events that poses significant risk to CBS", National Amusements said in a statement.

The proposal to dilute the voting power of the controlling stockholder is audacious.

National Amusements said on Monday it did not intend to replace the board, but on Wednesday signaled that had changed.

The legal wrangling could become a protracted affair if CBS tries to continue to fight the Redstones.

After two hours of argument in a Wilmington courtroom, Bouchard entered an interim order pausing the case, saying he had "never seen anything quite like what transpired here". After $1.34 actual earnings per share reported by CBS Corporation for the previous quarter, Wall Street now forecasts -13.43% negative EPS growth.

The clearest precedent, he said, "expressly endorsed" a controller's right to pre-emptively protect its interest. "Exercise of that right, of course, is subject to judicial review, which can afford full relief in this circumstance in my opinion to vindicate the interests of CBS and its stockholders, if appropriate".

Other reports by Iphone Fresh

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