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Delaware judge temporarily halts legal row between CBS, National Amusements

A judge at the Delaware Court of Chancery has temporarily halted the escalating legal battle between CBS Corp. and National Amusements Inc. involving the Redstone family's control over the media company, Variety reported.

Chancellor Andre Bouchard said he would issue a ruling May 17 on CBS' lawsuit against National Amusements and company President Shari Redstone for allegedly breaching its fiduciary duty by pushing for a recombination of CBS and Viacom Inc.

The suit also asks the court to block National Amusements from interfering with a special CBS board meeting on May 17, during which the directors will consider declaring a dividend that would significantly dilute National Amusements' voting power in CBS. If issued, the dividend would dilute National Amusements' voting interest from approximately 79% to 17%.

CBS directors will also consider stripping Shari Redstone of control over the company and its board in the meeting, Reuters reported.

According to the CBS lawsuit, Shari Redstone is trying to "force through a merger of CBS and Viacom on terms that are contrary to the best interests of the public stockholders." Moreover, the suit alleges "there are very real dangers" Redstone will seek to replace CBS board members "who do not do her bidding" or change the company's organizational documents.

In a statement, National Amusements said it was "outraged" by CBS' actions, adding it had "absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies."

Analysts and legal experts said earlier they agree CBS' lawsuit and its planned dividend both represent bold and unusual moves against a controlling shareholder, and winning court approval might be difficult for CBS.

A CBS special board committee has resisted a merger with Viacom, due in part to concerns raised about the merged company's corporate governance, according to Reuters.