In the ongoing boardroom clash between Blackwells Capital and Walt Disney (NYSE:DIS), Blackwells has escalated its pressure on the entertainment giant by filing a lawsuit on Thursday. The suit alleges potential disclosure violations in Disney’s dealings with hedge fund ValueAct Capital.
Filed in a Delaware court, this legal action marks the latest development in a protracted battle over board representation and corporate decision-making at Disney.
Disney swiftly responded to the lawsuit, dismissing the claims as “baseless” and characterizing the legal move as a “desperate attempt to gain attention for their slate of director candidates.”
The crux of Blackwells’ lawsuit revolves around Disney’s relationship with ValueAct Capital and an information-sharing agreement inked earlier this year. Blackwells seeks access to Disney’s books and records to investigate its suspicions regarding Disney’s dealings and disclosures related to ValueAct.
It’s worth noting that Disney had withdrawn its investment with ValueAct entirely, and ValueAct no longer managed any funds for Disney when the hedge fund acquired a stake in Disney last year, according to a source familiar with ValueAct’s operations.
Earlier this month, Mason Morfit, ValueAct’s chief investment officer and co-chief executive, threw his support behind Disney CEO Bob Iger and the incumbent Disney board, effectively sidelining the director candidates proposed by Blackwells and another hedge fund, Trian Fund Management.
Proxy advisory firm ISS, a key influencer of investor votes, stated last week that “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 clarified on Thursday that none of its pension plan funds were currently invested with ValueAct, nor were they managing any Disney pension plan funds when the information-sharing agreement with Disney was forged. The company also claimed to have offered to meet with Blackwells to substantiate these facts through documentation, but Blackwells declined the meeting.
In response, a spokesperson for Blackwells reiterated shareholders’ entitlement to full disclosure regarding the ValueAct relationship, including comprehensive details on all fees paid by Disney to ValueAct over the preceding decade leading up to ValueAct’s endorsement of the Disney board.