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Blackwells, in proxy fight with Disney, sues Disney over disclosure in hedge fund relationship
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Blackwells, in proxy fight with Disney, sues Disney over disclosure in hedge fund relationship
Mar 28, 2024 9:59 PM

NEW YORK (Reuters) -Blackwells Capital upped the pressure on Walt Disney in a long-running boardroom battle, suing the entertainment giant on Thursday for information that may point to possible disclosure violations in dealings with hedge fund ValueAct Capital.

The suit, filed in a Delaware court, is the latest chapter in a fight over who will sit on Disney's board and help guide the home of Mickey Mouse in business and personnel decisions.

Disney called the claims "baseless" and said the lawsuit is a "desperate attempt to gain attention for their slate of director candidates."

Blackwells and another hedge fund, Trian Fund Management, are trying to persuade investors to elect their director candidates while Disney is backing its own directors at next week's annual shareholders meeting.

Blackwells' suit centers around a relationship between the entertainment company and ValueAct Capital and an information-sharing agreement the two signed earlier this year. The suit said Blackwells wants to inspect books and records to "investigate its credible suspicion of wrongdoing regarding Disney's dealings and disclosures related to ValueAct."

Disney had fully withdrawn the money it had invested with ValueAct and the firm no longer managed any money for the company when ValueAct built its stake in Disney last year, a person familiar with ValueAct's business told Reuters earlier this month.

Earlier this month the firm's chief investment officer and co-chief executive, Mason Morfit, backed re-electing Disney CEO Bob Iger and the entire Disney board, keeping the two hedge funds' contenders out.

Proxy advisory firm ISS, which often guides investors' votes, wrote last week, "ValueAct also indicated that although its investment team met with Bob Iger on very limited occasions in the years prior to its investment in Disney, Mason Morfit and Bob Iger do not have a personal relationship."

Disney said on Thursday that "no Disney pension plan funds are currently invested with ValueAct nor were they managing any Disney pension plan funds at the time of their entering into an information-sharing agreement with the company." Disney said it had offered to meet with Blackwells "to provide documentation confirming those facts, but Blackwells declined the meeting."

A Blackwells spokesperson said, "Shareholders are entitled to full disclosure about the ValueAct relationship including, among other things, all fees to it by Disney in the 10-year period leading up to ValueAct's endorsement of the Board."

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