CBS Sues Controlling Shareholder Redstone Over Proposed Viacom Deal

CBS Corp. on Monday asked a court to block controlling shareholder Shari Redstone from interfering at a special meeting of its board called to consider a merger with Viacom.

The news of the lawsuit, filed to a Delaware court and also seeking to dilute the 79 percent voting rights in CBS held by Redstone's National Amusements Inc., pushed the network's shares (CBS) up nearly 1 percent and those in Viacom (VIA) down 6 percent.

National Amusements, a privately held movie theater company owned by Sumner Redstone and his daughter Shari, own a majority of the voting shares in both companies.

CBS said in the lawsuit Shari Redstone had taken actions over the past two years that have led the special committee of the board considering the merger to conclude that she presents a significant threat of irreparable and irreversible harm to the company and its stockholders.

The suit seeks to push through the issue of a stock dividend that would dilute National Amusements' voting interest from about 79 percent to 17 percent, CBS said in a statement.

The dividend would not dilute the economic interests of any CBS stockholder, but would help the company to operate as an independent, non-controlled company and fully evaluate strategic alternatives, the company said.

National Amusements could not immediately be reached for comment.