CBS Corp. plans to challenge bylaw amendments put forth by controlling shareholder National Amusements Inc., or NAI.
The media company said in a May 22 SEC filing that the "purported" bylaw amendments are invalid under Delaware law and cannot become effective under controlling federal law and SEC rules until 20 days after the information statement is distributed to stockholders. As a result, CBS Corp. believes the board's decision to declare a dividend intended to dilute NAI's voting interest was not subject to the amendments.
National Amusements delivered written consents May 16 to amend CBS' bylaws to require that certain board actions, including dividends and bylaw changes, be approved by a supermajority of the CBS board of directors. Under the amendment, dividends would require approval by 90% of the directors then in office at two separate meetings held at least 20 business days apart. Of CBS' 14 board members, three, or about 21%, are NAI designees.
A Delaware judge ruled May 17 to deny CBS Corp.'s request for a temporary restraining order against National Amusements ahead of the board meeting to consider the special dividend, which was devised to dilute National Amusements' voting interest in the programmer from about 79% to 17%.
For months, National Amusements' leadership has been pushing for a merger between CBS and Viacom Inc., which is similarly controlled by National Amusements. Viacom, according to recent reports, is seeking a bid from CBS that would value the company at about $14.7 billion, about $3 billion higher than the valuation proposed by CBS.
