(Reuters) - A coalition of labor unions is ending its boardroom fight at Starbucks after the coffee chain last week agreed to work toward reaching labor agreements, two sources familiar with the matter told Reuters.

The Strategic Organizing Center (SOC), a coalition of North American labor unions, is withdrawing its three director candidates to the coffee chain's 11-member board one week before Starbucks investors were slated to elect directors to oversee corporate strategy at the company's March 13 annual meeting, the sources said, asking not to be named because the discussions are private.

Many large investors told the coalition, which includes the parent of Workers United which represents Starbucks workers, they are optimistic Starbucks is committed to changes and plans to repair its relationship with employees, the sources said.

"Investor concern with the board and management response to ongoing unionization efforts at Starbucks has been loud and clear, but last week's joint announcement from the company and Workers United of a settlement framework was welcome news that we hope means a fundamental change in direction," New York City Comptroller Brad Lander told Reuters.

The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a corporation.

The union coalition argued Starbucks' resistance to unionizing that began in 2021 tarnished the brand and hurt shareholders by weighing on the share price.

This year's other big board room fight is between Disney and two activist investors, Trian Fund Management and Blackwells Capital.

The coalition hired lawyers, a proxy solicitor and a communications firm who usually work with large activist hedge funds on big campaigns. It nominated three candidates with White House, National Labor Relations Board and economic policy expertise and was pushing ahead in trying to convince shareholders, including big index funds, that Starbucks needs better oversight as it works to repair labor relations.

"SOC Investment Group led an effective campaign with qualified candidates committed to preserving fundamental workers' rights and increasing long-term value, and the announced suspension of a contentious proxy fight is a win for workers and shareholders," Lander added.

He said Starbucks' investors now expect the company "to continue investing in their workforce, and we will continue to be engaged." The city owned $157 million worth, or 1.64 million shares, of Starbucks at the end of December.

While only about 370 U.S. Starbucks stores are unionized, the movement, as well as the proxy fight launched in November, tapped into growing support for organized labor after unions last year won concessions for Hollywood writers and auto workers.

Now the coalition, which did not reach any concessions with the company, is pinning its hopes on last week's news that Starbucks and the union that represents its workers will work to create a "foundational framework" that could lead to collective bargaining agreements and the resolution of lawsuits.

Its decision follows last week's recommendations by the two main proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis that urged Starbucks shareholders to back all 11 company directors, arguing the coalition had not sufficiently made its case to win seats.

But ISS wrote that the coalition, "has achieved at least a portion of what it ostensibly set out to accomplish."