Judge Rejects CBS Move to Strip Shari Redstone's Control of Company

Judge Rejects CBS Move to Strip Shari Redstone's Control of Company

"In light of the board's action today, that action was plainly necessary, and it is valid".

After taking a punch to the gut in the courtroom on Thursday, CBS took another blow on Wall Street soon after, following its request for a temporary restraining order against Shari Redstone and her holding company, National Amusements, which was struck down.

State Treasurer State of MI lessened its stake in shares of CBS Co.

CBS has been fighting pressure by National Amusements to merge with Viacom, which also is controlled by National Amusements.

The bylaw change came just an hour before the hearing in DE to consider CBS' request for a temporary restraining order against the Redstones - a move that seemed to startle even the judge overseeing the case.

Delaware Chancery Court Judge Andre Bouchard said that, as the controlling shareholder, Redstone has the right to take steps to protect that control. Under Delaware law, CBS would still be able to challenge Wednesday's bylaw changes, he said.

Original story: Thursday is a pivotal day in the fight for the future of CBS Corporation.

CBS, in its own statement, said that although it was disappointed by the outcome, "the ruling clearly recognizes that we may bring further legal action to challenge any actions by N.A.I. that we consider to be unlawful, and we will do so". (NYSE:CBS) by 0.7% during the first quarter, according to the company in its most recent disclosure with the SEC.

"We are pleased by the court's decision to deny CBS and its special committee's unprecedented motion to try to deprive a shareholder of its fundamental voting rights".

Meanwhile, CBS has pledged that if the board approves the dividend, it would not issue any shares or cause the dividend to become effective without the judge's consent.

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Redstone family holding company NAI controls almost 80% of CBS's voting stock, appears to have neutralized the dilution threat with a last-minute bylaw change requiring 90% of the board members to approve such a measure.

Shari Redstone is the daughter of media magnate Sumner Redstone, who led National Amusements to take over Viacom in 1987 and, in 2000, CBS.

The firm argued that Ms Redstone's interference in the merger process and other actions posed "significant threat of irreparable and irreversible harm" to CBS.

CBS officials noted that Bouchard found that the allegations in its lawsuit were sufficient to state a plausible legal claim for breach of fiduciary duty against Redstone and NAI.

NAI said after the CBS board meeting that "it has no intention of forcing a merger that is not supported by both CBS and Viacom".

At a Wednesday afternoon hearing, an attorney for Redstone decried the suit as a "Monday morning ambush", meant to permanently strip Redstone of her controller status.

The legal wrangling comes after months of strained relations among Redstone; Leslie Moonves, the chairman and CEO of CBS; and other members of CBS' board.

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".

In his ruling, Bouchard acknowledged the "tension" between the controlling stockholder's rights and those of an independent board of directors threatened with removal.

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