CBS sues majority shareholder intent on forcing Viacom deal

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CBS is seeking to have the preferred stock owned by Redstone and her National Amusements holding company diluted in order to keep her from replacing board members to complete the Viacom-CBS deal.

Moonves wants CBS COO Joseph Ianniello to be president and COO of the merged entity, and to succeed him as CEO when he retires.

The two companies were split up more than a decade ago by Shari's father Sumner Redstone.

Multiple sources say Verizon had been involved in high-level discussions with CBS a year ago.

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In a plan that would radically dilute Redstone's stake in the company from 79% to 17% (and her influence over merger negotiations), CBS is planning to hold a special shareholder meeting on Thursday to approve a dividend declaration. Redstone filled Sumner Redstone's newly vacant board seat with the Redstones' personal lawyer, who has since been instructing management and other directors on Ms. Redstone's and National Amusements' wishes, including the desire to replace certain directors.

Both companies are controlled by National Amusements.

The two committees have been working on the possible merger since February. The Redstone family instead wants Viacom CEO Bob Bakish to be the No 2 and succeed Moonves when the time comes.

National Amusements may view a combined media property, whose assets include a top broadcast network, a film studio and multiple cable outlets, as positioned to fetch a higher price from a potential acquirer.

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National Amusements said the TRO that CBS requested is due to National Amusements raising concerns about incidents of bullying and intimidation in relation to one CBS director, dating back to 2016.

CBS said in its statement that diluting Redstone's control would "enable the company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives". NAI has made every effort to deal with this matter privately and confidentially.

Barclays analyst Kannan Venkateshwar said the lawsuit by CBS reads as something of a dice roll that could lead to a "definitive end state" of either an independent CBS or the ouster of CBS' management team. On Wednesday, the company will hold its 2018-2019 Upfront presentation in NY.

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