Walt Disney wins ValueAct's backing in fight over its future

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The Walt Disney Co. has secured backing from investor ValueAct Capital, as the entertainment company prepares to do battle with activist Nelson Peltz over how to boost earnings and lift its stock price.

San Francisco-based ValueAct, an activist known for taking a more collaborative approach to achieving its goals, built a stake in Disney last year as the entertainment company grappled with its loss-making streaming business.

Disney said Wednesday that it has entered into an “information-sharing” agreement with ValueAct and will consult with the investment firm on “strategic matters.” She added that ValueAct will support Disney's board candidates for election at this year's annual meeting.

The shareholder meeting, typically held in March or early April, is set to be a sore one after Peltz's Trian Partners said it plans to nominate candidates to Disney's board.

Trian controls a stake worth about $3 billion in Disney, and has been at odds with the group over the past year, accusing the board of directors of being too close to CEO Bob Iger, who returned to run the company in late 2022.

Disney has come under pressure from investors to curb wasteful spending during the streaming boom, as Wall Street turns its focus to profitability.

“ValueAct Capital has a record of collaborating and coordinating with the companies in which it invests, and its co-CEO, Mason Murfitt, has been very constructive in the conversations we've had over the past year,” Iger said on Wednesday.

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ValueAct's less intimidating approach has helped it win favor with previous targets. Salesforce, which a year ago faced an onslaught of activist investors, including Elliott Management, gave Morfit a seat on the board.

Morfitt described Disney as “the world's leading entertainment company,” adding that it has “the best intellectual property assets, sports brand, theme parks and expertise in the industry.” ValueAct did not disclose the size of its stake.

News of Disney's deal with ValueAct came as smaller New York-based activist Blackwells Capital, which has a $5 million stake in Disney, said it would put forward its slate of nominees at a shareholder meeting.

The company, which previously targeted fitness company Peloton, said it plans to nominate Warner Brothers Discovery CEO Jessica Schill, Tribeca Film Festival co-founder Craig Hatkoff, and Leah Sullivan, the venture capitalist who founded TaskRabbit.

In December, Trian said she intended to nominate Peltz and former Disney executive Jay Rasulo as directors. The move marks Peltz's second attempt to force change at Disney after a previous attempt to allow Iger to implement changes at the group was aborted.

Trian's decision follows Disney's nomination in November of outgoing Morgan Stanley chairman and chief executive James Gorman and Sir Jeremy Darroch, former CEO of Sky Group, as directors of the board.

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