National Amusements, Inc. has effectively changed Viacom’s bylaws in order to block a pending Paramount Pictures sale.
“The principal amendment requires that any sale or financial transaction affecting all or a portion of Paramount Pictures must be unanimously approved by the Viacom Board of Directors,” the parent company wrote in statement Monday.
The amendment is “to protect the long-term interests of all Viacom stockholders,” National Amusements continued.
However, in a follow up statement later Monday afternoon, a spokesperson for Viacom said: “These illegitimate actions stem directly from the invalid changes made to the National Amusements, Inc. board and are completely at odds with good corporate governance.
“They are clearly intended to impede the ability of the Viacom Board of Directors to fulfill its obligations to all stockholders, including the public non-controlling stockholders who own 90 percent of the equity of Viacom,” the response continued.
In reality, National Amusements, Inc.’s requirement approval probably won’t happen now, as Sumner Redstone has publicly said he does not want to sell even a minority stake in Paramount. The sale was previously slated to go through by the end of this month.
“National Amusements has one objective with regard to Viacom and that is to create long-term value for the company’s stockholders,” the company’s press release stated. “While National Amusements is not opposed to a transaction that would unlock value at Paramount, it firmly believes that any proposed transaction should be thoroughly vetted and approved by Viacom’s full Board, and the rationale for such a transaction should be clearly articulated to Viacom’s stockholders in advance. National Amusements believes that any disposition of a key asset of Viacom must be part of a carefully constructed long-term strategy; it is not an end in and of itself.”
The specific provision that purportedly allows such a move falls under Article II, Section 10 of Viacom’s corporate bylaws, which were last amended on Sept. 15, 2011.
The bylaws specifically state the following:
“Any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing (or deemed to be in writing under applicable law), setting forth the action so taken, shall be signed by stockholders (or deemed to be signed by stockholders under applicable law) representing not less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered and dated as required by law. Prompt notice of the taking of such action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. The Secretary shall file such consents with the minutes of the meetings of the stockholders.”
And then the release asked and answered this:
Is this action connected to the legal motion filed by Philippe Dauman and George Abrams against Shari and Sumner Redstone in the state of Massachusetts?
No, this action was unanimously ratified by
the collectiveBoard of National Amusements and was taken in accordance with Delaware law and Viacom’s bylaws in order to protect the long-term interests of Viacom’s stockholders.
National Amusements holds about 80 percent of Viacom’s voting shares, that’s how it can do this. That Massachusetts hearing is scheduled for Tuesday.