How Nelson Peltz Fought His War With Disney Disney already faces major challenges, including skyrocketing costs for its streaming service and an unclear C.E.O. Succession plan. Now, Nelson Peltz, an activist investment firm known for buying blue-chip companies like Procter & Gamble, is facing a proxy battle with Trian.
But tensions between the two sides have been building for months, as their fight went public Wednesday after Disney refused Mr Peltz to join its board of directors, according to a Disney regulator announced this morning. A filing to The House of Mouse reveals how the House of Mouse clashed with one of Wall Street's top activist investors.
Last July, Peltz met with then-Disney CEO Bob Chapek at Disneyland Paris. Trian had not yet invested in the company at the time, but Chapek was under pressure. He's dragged Disney into the political warfare in Florida.The company's streaming service, Disney+, is in the red. And he alienated an important Hollywood colleague. However, Disney extended Chapek's contract for another three years. Shortly thereafter, Mr. Peltz met with two Disney directors to discuss future directorships.
In August, another activist, Dan Loeb's Third Point, announced an investment in Disney, proposing an ESPN spinoff, buying a stake in streaming platform Hulu's Comcast, and adding board members. A month later, Loeb signed a truce with Disney, and the company named her former Meta CEO, Caroline Everson, to its board of directors. In early November, Disney released a dismal earnings report. A few days later, Mr. Peltz called Mr. Chapek and formal negotiations began between the two companies. They met on November 12th. On November 20, Disney fired Chapek and reinstated Bob Iger as his predecessor. By then, Trian owned about $800 million worth of Disney stock. Trian and Disney executives met half an hour after him later that month, and Peltz offered to join the board.
In early December, Peltz notified Disney of his appointment to its board of directors and called a meeting. By the end of the month, the board had finally agreed to meet Peltz, but Iger said they would have to wait until he returned to his yacht off New Zealand.
Disney and Torian had a 45-minute date earlier this week. Noting that the company's stock price has fallen to its lowest level in almost eight years, Peltz told Disney to modernize its streaming business and return to profit growth. He focused, restored the dividend, and urged Mr. Peltz to pay the dividend, which was looking for a successor to Iger. The company then offered to make Mr. Peltz a "board observer," but suggested he was not a full board member and called on him to stop the public struggle. Activists refused. Within days, Disney announced Mr. Peltz's intentions and Mr. Tryon publicized his campaign.
Disney hopes they can fend off Mr. Peltz. The newly revealed background to Tryon's challenge suggests that Disney has shaken itself up, including firing Mr. Chapek and rehiring Mr. Iger. It may be to deny Mr. Peltz justification for calling himself the designated agent for change. It remains popular with many investors and analysts. linked to accounting.
Whether that's enough to convince investors is unclear. Peltz isn't asking Iger to resign, but he has repeatedly accused Iger of overpaying for the $71.3 billion acquisition of 21st Century Fox. Trian can point to successful restructurings of companies like P.&G. Rebuilding the entertainment giant is a new challenge, but General Electric.
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