Disney secures support from activist investor ValueAct Capital
04 Jan 2024
In a significant development, The Walt Disney Company has garnered support from ValueAct Capital, a notable activist hedge fund. This backing comes amid board challenges posed by billionaire financier Nelson Peltz.
ValueAct Capital, renowned for its constructive engagements with boards, expressed its support for Disney’s director nominees. This move highlights the growing trend of activist investors showing interest in Disney’s stock as the media giant grapples with various business challenges. These challenges include a stagnant stock price, concerns regarding streaming strategies, television networks, and movie productions, along with uncertainties about succession planning.
Apart from Nelson Peltz’s challenge for two board seats, other hedge funds seeking changes at Disney include Blackwells Capital, which recently announced its intent to secure three seats on the company’s board.
Disney confirmed that ValueAct would endorse the company’s director nominees during its upcoming annual shareholder meeting. As part of the agreement, Disney will engage in consultations with the $16 billion hedge fund, including meetings with the board.
Robert A. Iger, Disney’s Chief Executive, expressed his welcome for ValueActs’s input, citing the hedge fund’s track record of collaboration with the companies it invests in. Mason Morfit, Co-Chief Executive of ValueAct, emphasized their excitement to partner with Disney to lead the media industry forward in the evolving digital landscape.
This agreement represents Disney’s latest effort to appease investors. In November 2023, the company appointed two new directors: James P. Gorman, the Executive Chairman of Morgan Stanley, and Jeremy Darroch, the former Chief Executive of British broadcaster Sky.
While ValueAct’s stake in Disney is reportedly smaller than Peltz’s 33 million shares, the hedge fund is highly regarded for its constructive collaboration with corporate boards. The settlement with ValueAct eliminates a potential challenge for Disney.
The resolution with Peltz remains uncertain, as he advocates cost cuts, a revamped streaming strategy, and a clearer succession plan. Some shareholders, including the hedge fund Ancora Holdings, support Peltz’s efforts. However, others, like Blackwells, back Disney’s current leadership and urge Peltz to allow the company to focus on its bright future without being dragged into past uncertainties.
