CBS Corp. has sued to block a possible move by billionaire Sumner Redstone's daughter to oust some of the network's directors before they can consider a dividend that would lessen the Redstones' control of the company.
CBS officials said in a lawsuit that Shari Redstone, a current director, has threatened to remove some of her colleagues to facilitate a combination between the network and National Amusements Inc., Redstone's company that owns Viacom.
"Ms. Redstone has acted to undermine the management team, including, without board authority, talking to potential CEO replacements, deriding the chief operating officer and threatening to change the board," CBS officials said in the suit, filed Monday in Delaware Chancery Court.
CBS asked the court to issue a restraining order allowing the meeting to go forward as well as suing the company, alleging it breached fiduciary duties. The planned dividend would dilute the voting shares of Redstone's company to 17 percent from 79 percent.
The move rattled shares of Viacom Inc., with investors betting that a CBS takeover is less likely. The stock fell as much 5.5 percent to $28.57, the biggest intraday decline in three months. CBS gained as much as 2.2 percent to $53.67.
The two companies have been locked in an unusual tussle. The Redstone family controls both businesses, and they were one corporation before a breakup more than a decade ago.
But getting them back together has proved challenging. Shari Redstone has indicated before that she wants Viacom CEO Bob Bakish to become the combined company's second-in-command. CBS CEO Leslie Moonves would prefer to keep his own people in charge.
The case is CBS Corporation v. National Amusements Inc., No. 2018-0342, Delaware Chancery Court (Wilmington).
-- Bloomberg News