Blackwells sues Disney over disclosure in relationship with ValueAct

NEW YORK: Blackwells Capital upped the pressure on Walt Disney in a long-running boardroom battle by suing the entertainment giant on Thursday for information that may point to possible disclosure violations in dealings with hedge fund ValueAct Capital.

The suit, filed in a Delaware court, is the latest chapter in a fight over who will sit on Disney’s board and help guide the home of Mickey Mouse in business and personnel decisions.

Blackwells and another hedge fund, Trian Fund Management, are trying to persuade investors to elect their director candidates while Disney is backing its own directors.

Blackwells’ suit centers around a relationship between the entertainment company and prominent hedge fund ValueAct Capital and an information sharing agreement the two signed earlier this year.

Disney did not immediately respond to a request for comment from Reuters on Thursday.

Disney had fully withdrawn its investment in ValueAct and the firm no longer managed any money for the company when ValueAct built its stake in Disney last year, a person familiar with ValueAct’s business told Reuters earlier this month.

ValueAct previously managed pension fund assets for Disney and late last year began building a position in Disney.

Earlier this month the firm’s chief investment officer and co-chief executive, Mason Morfit, backed re-electing Disney CEO Bob Iger and the entire Disney board, keeping the two hedge funds’ contenders out.

Blackwells said Disney failed to properly disclose its arrangement with ValueAct Capital and is now suing to “determine whether wrongdoing, mismanagement, or breaches of fiduciary duty” took place.

“The incumbent Disney Board, has not done itself any favors by touting the agreement with ValueAct in their hopes to sway shareholders,” a Blackwells spokesperson said.

“Shareholders are entitled to full disclosure about the ValueAct relationship including, among other things, all fees to it by Disney in the 10-year period leading up to ValueAct’s endorsement of the Board.