Redstone had pressed for a deal in 2016, but CBS contends in its lawsuit that those negotiations came to a halt as soon as CBS insisted the combined company would operate outside of Redstone's control for at least five years.
CBS shares rose 4.7 per cent to $54.98 in NY on Monday on hopes of a better deal for the company, giving it a market value of $20 billion. "(CBS) Lawsuit Means All Out War, Rules Out Friendly Transaction with Viacom (VIAB) - CNBC" on May 14, 2018, also Streetinsider.com published article titled: "Viacom (VIAB) May option implied volatility increases after CBS (CBS) files suit against National Amusements", Streetinsider.com published: "Wall Street gains as trade worries subside" on May 14, 2018.
Shari Redstone, who wants the merger between the two companies, is accused of "breaching her fiduciary duty to CBS shareholders in her pursuit of a CBS-Viacom merger". "The Special Committee has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders' interests and would unlock significant stockholder value".
The holding company "had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies", the statement sent to AFP said.
It then lists a number of ways that Shari has allegedly abused her power to undermine the board and hijack control for herself and National Amusements. Viacom shares dropped 7 per cent to $28.05, giving it a market value of $12 billion, as investors fretted over the company's prospects as a stand-alone company. A sticking point in merger talks is what role her handpicked lieutenant - Viacom CEO Bob Bakish - would play. She's now sparring with Moonves over a plan to reunite CBS and Viacom, less than two years after giving the boot to Viacom's previous CEO.More news: Cannes 2018: Female stars protest on red carpet for equal rights
A DE court ruled in 2004 that the Hollinger board could dilute Black's voting control in response to what it considered to be the damage he had done to the company.
U.S. media giant CBS filed suit on Monday, alleging that majority shareholder Shari Redstone is seeking to "force" a merger with rival Viacom on unfavorable terms.
The undisclosed party is USA wireless carrier Verizon Communications Inc, according to two sources familiar with the situation who requested anonymity to disclose confidential details.
CBS is pursuing a temporary restraining order against Redstone to prevent alleged abuse of voting control and interference with intended share dilution.