CBS shareholders can continue to sue the 2019 merger of Viacom and CBS, a Delaware judge ruled.
Shari Redstone, daughter of the late media mogul Sumner Redstone, is accused of pursuing an unfair merger that created ViacomCBS Inc.
Reuters also reported the decision found it reasonable to explore a claim that former CBS chief Joseph Ianniello “sold” his support for the deal to Shari Redstone in exchange for severance pay of $ 125 million.
Delaware Chancery Court Vice-Chancellor Joseph Slights on Wednesday rejected motions to dismiss both Yanniello and ViacomCBS.
In today’s ruling, the judge cited a reversal of position by Redstone and Ianniello as worthy of consideration. Iannello tried to block the merger first, but then changed his mind. His overthrow increased his severance package from $ 60 million to $ 125 million. Redstone criticized the breakup of Ilanello at the lower number, but then supported it in order to move the merger forward.
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“The 180-degree change from Ilanello and Ms. Redstone from their previous positions supports reasonable inferences that Ianniello’s enriched severance package was a consideration and that he breached his fiduciary duty, with the help from the Defendants’ Director, giving her loyalty to Mrs. Redstone in return, ”Slights wrote. “By selling his approval of the merger – which the plaintiffs argue that Ianniello knew it was bad for CBS shareholders – Ianniello has likely violated his fiduciary duty of loyalty.
Ianniello disputed this allegation. He claimed he originally thought the merger was bad for CBS. But after former CBS CEO Les Moonves was ousted and Ianniello became interim CEO, he changed his mind. He left the company shortly after the merger of ViacomCBS.
Some CBS shareholders filed a complaint last April. Viacom shareholders have a separate action contesting the merger.
Both shareholder groups claim Shari Redstone ignored their interests when she forced the merger.
“At this point, Ianniello offered no basis that would allow the Court to deny the plaintiffs the reasonable inference that his contractual incentive to support the allegedly unfair merger outweighed his compensatory incentive as a shareholder to support only a fair merger, ”Slights wrote.
Last month, Slights also allowed Viacom shareholders must bring a separate action contesting the merger.