CBS sues Redstone firm over dilutive dividend, endangering Viacom deal

CBS’ special committee will meet on May 17 to discuss its options

CBS’ special committee will meet on May 17 to discuss its options

During the CBS board meeting Thursday, the directors will consider a dividend of Class A shares to Class B shareholders that would dilute National Amusements' voting interest from about 80 percent to 17 percent.

The complaint states that the Redstones and their company National Amusements are planning to use their power as "controlling stockholder" to approve a merger of Viacom and CBS just days after it was unanimously rejected by members of a Special Committee of the corporation's Board of Directors.

National Amusements owns a majority of the voting shares in both CBS Corp. and Viacom, the media company behind Paramount Studios and the cable networks Comedy Central, MTV and BET.

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"The special committee [of the CBS board] 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", CBS said in a news release.

Mid-Monday morning trading of CBS stock was up 1.2% to $53.23; Viacom was down 7% to $28.15. The companies separated as independent companies in late 2006.

According to reports, CBS has always been reluctant to do the deal, first starting in 2016, when Redstone initially pushed the idea.

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This surprising turn of events comes after CBS, Viacom and National Amusements spent months discussing a potential remerger of CBS and Viacom, approximately 12 years after the companies first split.

National Amusements could not immediately be reached for comment.

Additionally, in the proposed deal, Les Moonves, chairman/CEO of CBS would run the combine company, with Joe Iannielo, CBS' COO, becoming the No. 2 executive - leaving out Bob Bakish, president/CEO of Viacom.

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