April 14, 2024

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Disney activist investor Blackwells files lawsuit against company ahead of shareholder meeting

Disney activist investor Blackwells files lawsuit against company ahead of shareholder meeting

Disney activist investor Blackwells Capital is suing the media giant over what it sees as an inappropriate cozy relationship with another shareholder, Value Act Capital.

In the lawsuit filed Thursday in Delaware Chancery Court (read it here), Blackwells expressed concerns about whether ValueAct was paid to take a pro-Disney stance in a proxy battle with activists. Blackwells and Trian Fund Management have moved new votes onto Disney's board ahead of Wednesday's annual shareholder meeting, when votes in board elections will be officially counted.

The lawsuit requests “books and records to determine whether there have been wrongdoing, mismanagement, or breaches of fiduciary duty, including potential violations of disclosure obligations under the federal securities laws.” Blackwells also asserts that ValueAct managed Disney's pension funds from 2013 to 2023, a fact that Disney neglected to disclose when announcing its support for ValueAct.

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Blackwell's complaint has its roots in Disney's January 3 announcement. It touted ValueAct's support of the company's board nominees and management. In return, the company said it “will provide information to the investment firm and consult with ValueAct on strategic matters, including through meetings with Disney's board of directors and management.”

A Disney spokesperson called the lawsuit's claims “baseless” and called the complaint “just their desperate attempt to bring attention to their slate of director nominees.” The spokesperson went on to confirm: “No Disney Pension Plan funds are currently invested with ValueAct and they were not managing any Disney Pension Plan funds at the time they entered into the information sharing agreement with the company. Before the Blackwells filed this lawsuit, Disney offered to meet with them and provide documents that Those facts confirm, but Blackwells declined to meet.

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The legal clash comes after Blackwells publicly backed Chairman and CEO Bob Iger and the official slate of company board nominees on the same day as the ValueAct agreement last January. Unlike Trian, who has traded blows with Disney and frequently aired criticism, Blackwells reserved most of her anger for Trian and its leader, Nelson Peltz, although she proposed three alternative picks for the board.

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Shareholders have already begun casting their votes for board nominees, with Trian and Disney spending tens of millions of dollars to promote their competing views. When the votes are tallied next week, it will likely become Disney's most important shareholder meeting in 20 years, regardless of the outcome.

Shareholders have until 11:59 PM ET on Tuesday to cast their votes, with the results revealed at the meeting, which will be conducted virtually and streamed live on Disney's investor relations website.

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