CBS board members could take voting control from Redstones
It’ll be up to a judge.
Shari Redstone will dispatch her high-priced lawyers to a Delaware courtroom Wednesday afternoon to try to keep CBS’ independent board members from making a move that would result in her family losing voting control over the media giant.
Judge Andre G. Bouchard will decide whether CBS’ bold move to try to wrest control of the company from the Redstones’ National Amusements Inc. is legit — or just a fanciful quest.
CBS is asking Bouchard to restrain NAI from interfering in its bid to remain independent and not be forced to merge with Viacom — which is also controlled by the Redstones.
CBS insists it needs a temporary restraining order against NAI to ensure Redstone doesn’t preempt Thursday’s special meeting of the board — one aimed at cutting NAI’s voting power over CBS from 79 percent to 17 percent.
CBS claims the Les Moonves-led company not only has the right — but also a fiduciary responsibility — to thwart Redstone’s plans to reunite CBS and Viacom.
Shari has advocated bringing CBS and Viacom back together since orchestrating the ouster of Viacom CEO Philippe Dauman in August 2016.
Analysts contend her advocacy now has Redstone and Moonves beyond the point of no return.
Steven Cahall of RBC Capital Markets described Moonves-led resistance to undoing the deal that split CBS and Viacom apart in 2006 as “going the nuclear option.” But if NAI should prevail, he said, “CBS management is unlikely to hang around.” That alone would cost the Redstones plenty.
Moonves stands to collect $150 million if he’s dismissed before his contract expires in June 2021 — a number that rises to $187 million once additional payments are included, according to a Bloomberg estimate. Moonves’ golden parachute can balloon to $280 million if certain targets are met, Bloomberg reported.
According to its suit, CBS believes “it’s only a matter of time before Ms. Redstone will attempt to replace the independent directors at CBS who do not agree with her positions, just as she and NAI did at Viacom two years ago.”
This issue of timing became critical after CBS’s Special Committee voted unanimously May 13 that the merger with Viacom under consideration was not in the interest of CBS shareholders.
The committee’s veto moved Bernstein analyst Todd Juenger to raise his CBS target price to $65 — up from $53 — on grounds that the company stands to benefit from an M&A premium and from not being dragged down by Viacom, he said.
Juenger also cheered CBS’s defiance, calling it “one of those occasional instances that reinforce our hopes/beliefs that boards of public companies can really stand up for their shareholders’ interests.”
Even if Redstone gets her way, the analyst argued in a Tuesday update, she won’t be able to deny that five independent board members on CBS’s Special Committee unanimously voted against the merger.
NAI claims it has “absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies.”
If CBS wins Wednesday, it plans to distribute one Class A voting share for each Class A and Class B share — thus diluting the Redstone family’s control to 17 percent.