Disney drama builds for Bob Iger as ValueAct builds large stake

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By Dan Sears

ValueAct Capital has built a large stake in Walt Disney and sees room for the media and entertainment giant’s stock price to roughly double, people familiar with the investment firm’s thinking said Wednesday.

San Francisco-based ValueAct has known the Disney team for more than a decade and has been in contact with management as it built its stake over the last months, said the sources, who were not permitted to discuss the firm’s views publicly.

While the exact size of the stake is unclear and it could not be learned what specific changes ValueAct may be pushing for, the people said ValueAct believes the home of Mickey Mouse can flex its muscles anew.

News of ValueAct’s position was first reported by 13D Monitor.

ValueAct and Disney declined to comment.

Disney’s stock price could trade between $120 and $190 a share, far above its current $94.19 price, ValueAct has suggested, the people said.

CEO Bob Iger’s Disney is well positioned in terms of streaming subscribers and has a content library that spans Animation, Pixar, Star Wars, Marvel and general entertainment, the people said.

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Its theme parks can help earn more revenue from its characters and stories, the sources said.

Mickey Mouse
ValueAct believes the home of Mickey Mouse can flex its muscles anew.
Walt Disney World Resort via Getty Images

ValueAct’s position in Disney created fresh drama at a time the company, valued at $167 billion, is wrestling with another activist investor, Nelson Peltz’s Trian Fund Management.

Peltz said in a regulatory filing on Tuesday that Trian increased its stake in common shares by more than 400% to own 32.9 million shares, worth roughly $2.7 billion, at the end of the third quarter.

That stake is far bigger than those held by hedge funds Coatue Management, Adage Capital Partners and DE Shaw which each own stakes worth more than $100 million.

Last month, Peltz, 81, signaled that he planned to nominate several directors to the board when the nomination window opens in a few weeks.

He may be laying the groundwork for a second proxy fight after abandoning his push for one board seat in February after the company laid out plans to address criticism.

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Trian declined to comment.

CEO Bob Iger
ValueAct’s position in Disney has created fresh drama for CEO Bob Iger, who is wrestling with another activist investor, Nelson Peltz’s Trian Fund Management.
Getty Images

Peltz has argued the company needs a shareholder in the boardroom and Disney said earlier this year that Peltz was not qualified to serve on its board.

ValueAct meanwhile has board seats at roughly half of all companies in its portfolio.

Unlike other activist investors who noisily push for change through public presentations, ValueAct prefers to work quietly behind the scenes.

It often offers up its deep understanding of helping technology companies like Microsoft reinvent themselves, people familiar with the firm said.

In January, ValueAct CEO Mason Morfit was invited onto Salesforce’s board at a time the company had at least five activist shareholders.

Disney shares up up 3.7% at $94.42 on Wednesday.

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