Last Updated May 14, 2018 5:20 PM EDT
CBS is suing National Amusements, the media company's majority shareholder, alleging that it is violating its fiduciary duty to investors by pushing for a merger with Viacom.
The suit, filed Monday in Delaware Chancery Court, seeks to prevent National Amusements' president and controlling shareholder, Shari Redstone, from interfering with a planned meeting this week by CBS' board of directors to consider issuing a special dividend to stockholders that would effectively weaken her control of the media company.
"The special committee [of the CBS board] has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders' interests and would unlock significant stockholder value," CBS said in a news release. "If consummated, the dividend would enable the company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives."
Viacom shares fell 7 percent Monday following news of the lawsuit, while CBS shares rose 3 percent.
National Amusements owns a majority of the voting shares in both CBS Corp. and Viacom, the media company behind Paramount Studios and the cable networks Comedy Central, MTV and BET. Issuing the dividend would dilute National Amusement's holding of Class A voting shares in CBS from about 79 percent to 17 percent, reducing its control of the company.
CBS is the corporate parent of CBS News and CBS MoneyWatch. The company said in the suit against National Amusements, which also names Shari Redstone and her father, Sumner Redstone, as defendants, that the proposed deal with Viacom "is not in the best interests of CBS."
In a statement, National Amusements said it is "outraged" by the suit and denied it wants to force a CBS-Viacom deal on shareholders that does not have support from both companies.
Talk of a possible merger between CBS and Viacom has circulated for weeks, though discussions appear to have stalled as the companies try to thrash out issues related to valuation and who would control the combined entity.
-- The Associated Press contributed to this report