ValueAct Capital Backs Disney Amid Board Challenge
The Walt Disney Company announced on Wednesday that it has received the support of ValueAct Capital, a prominent activist hedge fund, in the face of a board challenge from billionaire financier Nelson Peltz. This development highlights the growing number of activist investors investing in Disney’s stock as the media giant confronts various business challenges, including a stagnant stock price, concerns about its streaming, television networks, and movie production strategies, and questions about its succession planning.
Activist Investors Targeting Disney
In addition to Nelson Peltz, who is seeking two board seats, other hedge funds seeking change at Disney include Blackwells Capital. Blackwells Capital recently announced its intention to seek three seats on Disney’s board.
ValueAct Capital’s Support
Disney stated that ValueAct Capital will support the company’s director nominees at the upcoming annual shareholder meeting. As part of the agreement, Disney will consult with the $16 billion hedge fund, including through meetings with the board. Disney’s CEO, Robert A. Iger, welcomed ValueAct’s input as long-term shareholders, emphasizing their track record of collaboration and cooperation with invested companies. Mason Morfit, co-chief executive of ValueAct, expressed excitement about partnering with Disney to lead the media industry forward and create long-term sustainable shareholder value.
Disney’s Efforts to Address Investor Concerns
This agreement is the latest step taken by Disney to appease restless investors. In November, the company added two new directors to its board. ValueAct’s stake in Disney is believed to be smaller than Nelson Peltz’s 33 million shares, but the hedge fund is highly regarded on Wall Street for its constructive collaboration with corporate boards. Resolving the issue with ValueAct removes a potential headache for Disney.
Challenges in Reaching a Settlement with Nelson Peltz
It remains uncertain what it would take to broker peace with Nelson Peltz, who has formed alliances with Ike Perlmutter, the former chairman of Marvel Entertainment, and Jay Rasulo, a former CFO of Disney. Peltz has advocated for cost cuts, a revamped streaming strategy, and a clearer succession plan.
Shareholder Divide
While some shareholders have supported Peltz’s efforts, including Ancora Holdings, others like Blackwells have remained unconvinced. Blackwells has endorsed Disney’s CEO, Bob Iger, and called on Peltz to stop his disruptive actions and allow Disney to focus on its bright future.
