Disney Settles The Most Expensive Proxy War In History – Can This “Restore the Magic”?

The “most expensive proxy fight” just concluded between Disney and two investment firms that tried to change the company’s direction with a series of board changes and strategy adjustments.

The Proxy Battle

A massive proxy fight has just ended between Disney and Nelson Peltz’s Trian Fund Management, backed by Blackwells Capital, as they attempt to gain board seats and influence within the company.

Trian Fund Management is an activist investment firm co-founded by Nelson Peltz, Peter May, and Ed Garden in 2005. Trian Fund Management is best known for investing in public companies and working with management to improve shareholder value.

Blackwells Capital

Joining Trian Fund Management in their proxy war against Dinsey is Blackwells Capital, an alternative investment management firm focusing on activist and passive investments. Trian Fund Management and Blackwells Capital were pushing for changes within the company because they believed the company was falling short of its potential.

The most noticeable change they asked for was adding several new board members in order to best direct Disney going forward. On the other side, Disney and its current CEO, Bob Iger, have maintained their faith in the current system.

George Lucas Weighs In

Disney and Iger also had their fair share of supporters, though, with Star Wars creator George Lucas saying, “I remain a significant shareholder because I have full faith and confidence in the power of Disney and Bob’s track record of driving long-term value.” 

Furthering his support, Lucas went on to say, “I have voted all my shares for Disney’s 12 directors and urge other shareholders to do the same.” At the same time, Disney and Iger also received support from JPMorgan Chase CEO Jamie Dimon and Glass Lewis, another proxy advisory firm.

An Expensive Battle

What makes this proxy battle particularly interesting is that it just might be the most expensive shareholder fight in history. When all the expenses from each party involved were estimated, experts believe it surpassed $70 million.

Another point of contention for Trian and Blackwell was the succession plan for the company once Bob Iger was no longer the CEO. Trian and Blackwell felt that Disney was failing with its creative direction and not effectively using new technologies.

Restoring the Magic

In a letter to the company Trian wrote that the company had “lost its way” and they wanted to help “restore the magic.” However, Disney responded by refuting these claims and saying the nominees they were presented with lacked the qualifications to take on their proposed positions.

Disney’s response said the nominees “do not have the qualifications or experience to be effective Disney directors, and could disrupt the Company’s significant progress.” In an attempt to repair relationships with frustrated shareholders, Disney is making a series of strategic moves that include investing in Epic Games and launching a sports-focused streaming service.

The New Plan

Recently Trian announced the end of this proxy battle because Disney revealed a new restructuring plan, which includes laying off 7,000 employees. In his announcement, Peltz said, “Now Disney plans to do everything we wanted them to do. We wish the very best to Bob [Iger], this management team, and the board. We will be watching. We will be rooting.”

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Featured Image Credit: Shutterstock / The Image Party.

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