Shari Redstone Alleges CBS CEO Threatened to Quit If Board Didn't Strip Redstones of Control
May 29 2018 - 12:18PM
Dow Jones News
By Keach Hagey and Joe Flint
Shari Redstone shot back at CBS Corp. in court Tuesday, alleging
that CBS Chief Executive Leslie Moonves gave the CBS board an
"ultimatum" that he would resign unless directors voted to strip
her family of voting control.
In a complaint filed Tuesday in the Delaware Court of Chancery,
Ms. Redstone and her family holding company, National Amusements
Inc., say that CBS's action to strip National Amusements of voting
control by issuing a dilutive dividend to all shareholders is
invalid.
They say that the recent legal attacks against the Redstone
family aren't motivated by the CBS board's concern over being
forced to merge with corporate sibling, Viacom Inc., as CBS says.
Rather, Ms. Redstone says that the motivation is Mr. Moonves's
opportunistic seizure of the moment to throw off the yoke of having
a controlling shareholder that he has long chafed against,
according to the complaint.
"The only cogent, but manifestly improper, explanation for the
Director Defendants' unprecedented action is that Leslie 'Les'
Moonves, CBS's longtime CEO, has tired of having to deal with a
stockholder with voting control and has taken particular umbrage
that the exercise of such stockholder's control has migrated from
Sumner Redstone to his daughter, Ms. Redstone," the complaint
alleges.
Ms. Redstone rose to power in 2016 following a power struggle at
Viacom that led to the resignation of her ailing 95-year-old
father, Sumner Redstone, from the boards of both CBS and
Viacom.
In the wake of several months of merger talks that stalled over
how the merged company would be managed, CBS filed a lawsuit on May
14 saying it had voted against a merger and was seeking to block
National Amusements from being able to replace any board members
before it could vote on stripping the firm of control. National
Amusements then changed CBS's bylaws to require 90% of directors to
support such a move, a day before the CBS board held the vote. The
outcome is now up to a Delaware judge.
"Today's reactive complaint from NAI was not unexpected," CBS
said in a statement. "The amended complaint filed last week by CBS
and its Special Committee details the ways in which NAI misused its
power to the detriment of CBS shareholders, and was submitted after
careful deliberation by all involved. We continue to believe firmly
in our position."
In the complaint, Ms. Redstone and National Amusements reiterate
their insistence that they were never going to pursue a merger
without the companies' support. In fact, according to the
complaint, a week before the CBS special committee convened to
recommend against a merger and filed a lawsuit, "NAI had determined
that it no longer supported a merger" and Ms. Redstone told
Viacom's special committee about the decision. The special
committee told her that it preferred to have a chance to complete
its assignment, the complaint says. The court documents don't
specify whether CBS was notified.
A person familiar with CBS's position said that neither National
Amusements nor Viacom had ever suggested to CBS that they no longer
supported the merger, and noted that National Amusements had been
saying that a merger was close and that a price had been agreed
upon.
Write to Keach Hagey at keach.hagey@wsj.com and Joe Flint at
joe.flint@wsj.com
(END) Dow Jones Newswires
May 29, 2018 12:03 ET (16:03 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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