is shifting to thwart CBS Corp.’s efforts to strip her household of voting management.
The Redstones’ household holding firm, Nationwide Amusements Inc., issued a change to CBS’s bylaws on Wednesday in an try to dam the board’s means to dilute its voting energy.
Amending the bylaws marks a major escalation within the battle breaking out between Ms. Redstone and CBS.
CBS stated in a lawsuit this week that it needs to stop Ms. Redstone and Nationwide Amusements from overhauling CBS’s board and forcing a merger of CBS and its sister media firm Viacom Inc.
The Redstones and Nationwide Amusements responded Wednesday in a authorized submitting, saying that they had no such intentions. They referred to as CBS’s makes an attempt to concern new voting shares to dilute their practically 80% voting management “egregiously overboard and unjustified.” In addition they argue that CBS would produce other choices legally that wouldn’t require diluting the Redstones’ voting curiosity, together with difficult the removing of any director.
“That is an unprecedented usurpation of a controlling stockholder’s voting energy,” Nationwide Amusements’ legal professionals wrote.
The paperwork filed by the Redstones had been in opposition to the movement for a brief restraining order that CBS’s particular committee of unbiased board members filed on Monday. The plaintiffs are in search of to dam Nationwide Amusements from changing board members or modifying the corporate’s governance paperwork earlier than CBS convenes a particular assembly to vote on diluting the Redstones’ management.
A half hour earlier than the beginning of a listening to on the short-term restraining order in Delaware Chancery Courtroom on Wednesday, Nationwide Amusements introduced a change to CBS’s bylaws requiring a supermajority of board members to approve actions similar to dividends and amendments to bylaws. The hassle to dilute Nationwide Amusements’ voting energy is structured as a inventory dividend.
The supermajority requires 90% of CBS’s 14 board members to approve such a change, in accordance with an individual aware of the matter. As a result of Ms. Redstone, who’s vice chairman of CBS, would doubtless have the assist of the 2 Redstone household legal professionals additionally on the board,
that might make CBS’s proposed dilution of the Redstones’ voting management unlikely to move, the individual stated.
“The most recent step by NAI gives additional proof of why we concluded that we had no selection however to file our motion within the Delaware courts, with a purpose to defend the pursuits of all CBS shareholders,” CBS stated in a press release in response to the bylaw change. “We proceed to be assured in our place and stay up for presenting our case in court docket.”
In court docket paperwork, Nationwide Amusements stated that whereas it had no intention of overhauling CBS’s administration and board, CBS’s newest actions “have compelled NAI to contemplate exercising its rights.”
Ms. Redstone has been urging CBS and Viacom, the 2 corporations Nationwide Amusements controls, to contemplate a merger for the higher a part of two years. After dropping an effort in late 2016, she revived it firstly of the yr.
Based on the Nationwide Amusements’ legal professionals, the CBS and Viacom particular committees contemplating the merger got here to an financial settlement on the phrases of the merger, and had been merely held up over Ms. Redstone’s want that Viacom Chief Govt
get a board seat within the merged firm—a nonstarter for CBS Chief Govt
A CBS spokesman stated, “There couldn’t have been a deal on value in isolation from the opposite elements of this transition.”
In court docket paperwork, CBS stated its particular committee got here to the conclusion final weekend that a merger wasn’t in the most effective pursuits of CBS shareholders. In figuring out to take motion to dilute the Redstones’ voting curiosity, CBS pointed to press reviews, together with in The Wall Road Journal, that Ms. Redstone was contemplating changing board members.
Whereas Nationwide Amusements denies it ever thought of a wholesale overhaul of CBS’s board, it stated in its submitting that it did push to switch one CBS board member:
A significant determine in Boston’s monetary group and chairman emeritus of Financial institution of America, Mr. Gifford is near Mr. Moonves and sat on CBS’s highly effective compensation committee, in accordance with individuals aware of the matter.
He additionally sits on CBS’s particular committee, which consists of 5 unbiased administrators evaluating the merger. All 5 had been named as plaintiffs together with CBS Corp. in Monday’s lawsuit in opposition to Ms. Redstone and Nationwide Amusements.
Final Friday, Mr. Klieger—an legal professional for Ms. Redstone and her father, ailing mogul
—advised CBS director
about Nationwide Amusements’ “discomfort with the continued board place of Mr. Gifford given sure incidents that passed off in 2016 and 2017,” and requested for him to be quietly faraway from the board, in accordance with the paperwork.
CBS stated in a press release that it’s “unlucky and revealing that NAI has resorted to baseless private assaults in opposition to a member of the CBS Board and its Particular Committee,” including that the allegations in opposition to him are “not solely imprecise and unsubstantiated, they’re totally inconsistent with our data of him.” CBS added that simply six weeks in the past NAI “expressed its intention in an SEC submitting to re-elect him.”
Mr. Gifford referred a name to CBS and its assertion.
Nationwide Amusements argues that voting to strip it of its controlling place can be “a breach of fiduciary obligation by the administrators who vote in favor of it” with “merely no precedent in Delaware legislation.” It additional argues that the dilutive dividend can be “invalid,” based mostly on previous court docket actions defending the rights of controlling shareholders.
CBS countered that it’s a “fundamental precept of Delaware legislation that a controlling stockholder can not use its management over company course of to hurt different stockholders.”
Nationwide Amusements stated it was “at a loss to elucidate” CBS’s actions “besides that CBS Board and administration crew have merely turn into uncomfortable with the fact that CBS has a controlling stockholder and would favor that that not be the case.”
Write to Keach Hagey at firstname.lastname@example.org and Joe Flint at email@example.com
Supply hyperlink – https://www.wsj.com/articles/redstones-call-cbs-maneuver-unprecedented-usurpation-of-voting-power-1526490887?mod=pls_whats_news_us_business_f