Disney wins ValueAct, Blackwells backing in boardroom fight with Trian

By Svea Herbst-Bayliss

(Reuters) -Activist hedge funds ValueAct Capital and Blackwells Capital moved on Wednesday to back Walt Disney (NYSE:) Co as it defends itself against a board challenge from a third activist investor, Trian Fund Management.

The unusual twist in the battle for Disney’s board underscores the high stakes in the company’s attempted turnaround under CEO Bob Iger.

Iger led Disney from 2005 to 2020, and returned to the helm in November 2022 as investors punished the company’s stock for a $1.5 billion quarterly loss in its streaming division and the underperformance of many of its movie franchises.

Disney said on Wednesday it had reached a deal with ValueAct to advise it on strategy and support its director nominees at its annual shareholder meeting.

Separately, Blackwells said it has nominated three directors to Disney’s board who, unlike Trian, are supportive of the company’s strategy, confirming an earlier Reuters report.

“ValueAct has a track record of collaboration and cooperation with the companies it invests in, and its co-CEO Mason Morfit has been very constructive in the conversations we’ve had over the past year,” Iger said.

Disney confirmed Blackwells’ nominations and said its governance and nominating committee would review the candidates and provide a recommendation.

“Disney has an experienced, diverse, and highly qualified board that is focused on the long-term performance of the company, strategic growth initiatives including the ongoing transformation of its businesses, the succession planning process, and increasing shareholder value,” it said.

Trian did not immediately respond to a request for comment.

Its CEO Nelson Peltz has nominated himself and a former Disney chief financial officer, James Rasulo, to Disney’s board, positioning themselves as the people the media and entertainment giant needs to cut costs, lay out a CEO succession plan, and revamp the group’s streaming operations.

ValueAct has known the Disney team for more than a decade and has been in contact with management as it built its stake over the last months, sources told Reuters in November.

It sees room for the company’s stock price to roughly double, the sources had said. On Wednesday, Disney’s stock price was mostly flat at $90.60.

The investment firm, which has long preferred to work with target companies out of the spotlight, has experience in the media sector.

It previously held a board seat at 21st Century Fox, and supported the company when it sold its entertainment assets to Disney.

A year ago ValueAct’s co-CEO Mason Morfit was invited onto the board of Salesforce (NYSE:), and helped defuse a brewing fight between the business-software maker and a handful of activists who were threatening a proxy fight.

ValueAct has board seats at roughly half the companies in its portfolio.

In an effort to blunt the board challenge, Disney already refreshed its board in November, naming former Morgan Stanley CEO James Gorman and former SKY CEO Jeremy Darroch as directors.