Blackwells Capital sues Disney over ties to ValueAct in proxy fight

By Jef Feeley and Crystal Tse

Blackwells Capital LLC asked a Delaware judge to force Walt Disney Co. to hand over records about its relationship with activist investor ValueAct Capital Management and the role it played in a fight over the makeup of the entertainment giant’s board of directors.
 

Blackwells claimed in a court filing Thursday that Disney didn’t properly disclose financial ties to ValueAct before ValueAct backed Disney’s director candidates in an ongoing proxy fight. ValueAct managed more than $350 million of Disney pension monies over a 10-year period, Blackwells said.

“The claims made by Blackwells Capital are baseless, and this is merely their desperate attempt to gain attention for their slate of director candidates,” Disney said in an emailed statement. “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 offered to meet with Blackwells and provide documentation confirming that ValueAct had stopped managing Disney pension funds but Blackwells declined the offer, according to the statement.

Along with fellow activist Disney investor Nelson Peltz, Blackwells is pushing for board changes opposed by the entertainment company. Disney’s slate of candidates got the public backing of ValueAct and its Chief Executive Officer Mason Morfit earlier this year. Peltz’s Trian Fund has questioned current Disney CEO Bob Iger’s management of the company and taken particular issue with what he calls the company’s “woke film strategy.”

Blackwells is pushing “to inspect corporate books and records to investigate its credible suspicion of wrongdoing regarding Disney’s dealings and disclosures related to ValueAct,” it said in the court filing.

According to proxy adviser Institutional Shareholder Services, ValueAct says it no longer manages Disney funds.

“In response to an inquiry from ISS regarding Blackwells’ allegations, ValueAct has clarified that it no longer manages assets on behalf of the DIS pension, and that the DIS pension plan fully redeemed its investment before ValueAct built its stake in the company,” the adviser said in a report earlier this month. 

A representative for ValueAct didn’t immediately respond to a request for comment Thursday on the Delaware Chancery Court suit.

Disney and ValueAct announced an information-sharing pact in January. As part of the agreement, the California-based investor, which had owned shares of New York Times Co., Spotify, 21st Century Fox and Nintendo, will support the Disney director nominees. “ValueAct Capital has a track record of collaboration and cooperation with the companies it invests in,” Iger said at the time.

In its proxy filings, Disney argues Peltz downplays the challenges the company is facing and that the investor’s strategy changes aren’t innovative. Disney investors are scheduled to vote April 3 on board nominees.

The case is Blackwell Onshore LLC v. The Walt Disney Co., 2024-0321, Delaware Chancery Court (Wilmington)