Nelson Peltz has called off his fight against Walt Disney a day after the company unveiled a restructuring plan involving the loss of 7,000 jobs, ending one of the biggest corporate battles in recent years.
The end of the activist investor’s push removes a distraction for chief executive Bob Iger, who is seeking to steer the company’s lossmaking streaming services towards profitability.
Disney shares are up 18 per cent since Peltz announced his intention to join the board less than a month ago, a rise likely to generate a substantial profit on his stake of around $900mn.
“The proxy fight is over,” Peltz said on Thursday morning. He added that the changes sought by his hedge fund, Trian Partners, had been addressed by the restructuring plan and the entertainment giant’s intention to reinstate the dividend suspended during the pandemic. “Now Disney plans to do everything we wanted them to do.”
Disney and Peltz had been set to go head to head at the company’s annual shareholder meeting on April 3 after it declined to nominate him as a director in early January and appointed Nike veteran Mark Parker as its next chair to get ahead of the looming fight.
Iger himself returned to Disney in November for a two-year stint aimed at reviving the company’s creative engines, and shifting its streaming business into profitability by 2024 after the disastrous tenure of Bob Chapek, his chosen successor.
Analysts said that taking on Iger, one of the most celebrated US chief executives, would have been a challenge even for Peltz, a veteran activist known for his bruising campaigns against companies such as Procter & Gamble.
“We wish the very best to Bob, this management team and the board,” Peltz told CNBC on Thursday morning. “We will be watching. We will be rooting.”
Disney has many retail investors with an emotional connection to the company, and Iger was believed to have strong institutional support.
The two parties traded blows following Parker’s appointment, with Trian releasing a 35-page report shortly afterwards that criticised Disney’s dealmaking, in particular its acquisition of 21st Century Fox in 2018.
It also attacked cost inefficiencies at the media group’s streaming business and called its succession planning process “broken”.
Disney retorted that Peltz had no experience in the media industry and was unsuitable for the company’s board. It also criticised Trian’s decision to allow Peltz’s son, Matthew, to run as an alternate for the board seat.
Iger’s restructuring announcement sent shares in Disney up as much as 9 per cent in after-hours trading, although its shares were 2.5 per cent higher at mid-morning on Thursday after Peltz abandoned his fight.
The Disney chief also adopted one of Peltz’s main ideas: reinstating the dividend. Iger said he would ask the board to consider restarting the dividend at a modest level by the end of this year, gradually increasing it as business improved. “Our cost-cutting initiatives will make this possible,” Iger said.
Those arguments appear to have persuaded Trian to back off from the proxy fight — a rare move for the fund.
Disney said: “We respect and value the input of all our shareholders and we appreciate the decision by Trian Fund announced by Nelson Peltz this morning.”
