CNet to Appeal Court's Bylaw Ruling

Court Watch Posted on

CNet Networks Inc. said Monday that it will appeal a lower court's decision on bylaw provisions to the Delaware Supreme Court.

Last week the Delaware Chancery Court ruled that CNet's bylaws do not give it the ability to prevent a group of dissident shareholders led by an affiliate of hedge fund Jana Partners LLC from nominating directors to the company's board or proposing an increase to the board's size.

The court's decision "incorrectly calls into question the bylaws of a large number of companies with the same or similar bylaw provisions," CNet said in a release. The company said its stockholder-approved bylaws are "fully applicable" to the hedge fund.

A "costly and disruptive proxy contest" is not in the best interest of stockholders, and Jana should not be able to seek control of CNet without paying a premium, the company said.

In a letter to CNet Chief Executive Neil Ashe issued earlier Monday, Jana managing partner Barry Rosenstein questioned whether an appeal would benefit shareholders. "We believe it is time for fundamental strategic and operational change at CNet, and that the nominees we have proposed... have the collective experience and expertise to successfully implement this change," he wrote.

Jana had about a 10 percent stake in CNET as of Dec. 31.

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