"By any reckoning, the dividend proposal is an extraordinary measure, presumably reflective of the depth of concern the independent members of the special committee have about Ms. Redstone's intentions, " Bouchard noted in his ruling. "In light of the board's action today, that action was plainly necessary, and it is valid". It dived, as 80 investors sold CBS Corporation shares while 278 reduced holdings.
CBS' independent directors on Sunday concluded that merger was not in the best interest of its shareholders. In a statement, CBS signaled that it may pursue further legal action against National Amusements. Since National Amusements holds three seats on the board and there are only 14 directors, a 90% majority vote would be highly unlikely. On Wednesday, less than an hour before the hearing in DE was to begin, Ms. Redstone moved to amend CBS's bylaws to effectively give her control of the board.
The Redstones haven't (in the judge's view) done anything truly damaging to shareholders yet, so the judge is denying the restraining order; but if they do something that appears truly damaging, the judge may well intervene.
A DE judge ordered a pause on Wednesday in a dispute between CBS and its majority shareholder that could decide control of the company. Under Delaware law, CBS would still be able to challenge Wednesday's bylaw changes, he said.
CBS divisions range from the most-watched USA television network, to Network Ten Australia, Showtime Networks and the publisher Simon & Schuster, among others. He cited a previous DE court ruling that said a controlling shareholder has a right to take a pre-emptive first move to protect its control interest in the face of company's plan to dilute that voting control.
The legal filings come as CBS, led by CEO and chairman Les Moonves, pushes back against pressure by National Amusements to merge with Viacom, which also is controlled by National Amusements.
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"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". The broadcaster on Monday filed suit to stop National Amusements from interfering with the board meeting to consider the dividend.
Bouchard wrote that CBS may have an argument that National Amusements, which has controlling shares in CBS and Viacom, has breached its fiduciary duty.
Viacom and CBS were previously part of the same company, but Sumner Redstone, Shari's father, separated the two firms in 2005.
At stake is the future of both CBS -home of 60 Minutes and The Big Bang Theory-as well as Viacom-owner of MTV, Comedy Central, and several other networks.
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.
But Redstone's camp says she has no intent to "force" a merger. Counsel for CBS countered that the company's request for a temporary restraining offer was narrowly tailored and would not take effect until the court had ruled on its legality.
In his ruling, published just before noon Thursday, Bouchard said CBS had acted in a "sensible and timely" manner, but the case had raised the question of whether a company's controller or its board should have "first-mover" advantage to take action in a corporate dispute.
NAI issued a statement saying the ruling vindicates its right to protect its interests.