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By Svea Herbst-Bayliss and Dawn Chmielewski
NEW YORK (Reuters) – Blackwells Capital has stepped up pressure on Walt Disney in a long-running management battle, suing the entertainment giant on Thursday over data that could indicate potential disclosure violations in deals with hedge fund ValueAct Capital.
The lawsuit, filed in a Delaware court, is the latest bankruptcy in a fight over who will sit on Disney’s board of directors and support the House of Mickey Mouse through business and private decisions.
Disney called the claims “baseless” and said the lawsuit was a “desperate attempt to draw attention to its slate of director candidates. “
Blackwells and hedge fund Trian Fund Management are trying to convince investors to choose their director candidates, while Disney is backing its own managers at next week’s annual shareholder meeting.
Blackwells’ lawsuit centers on a relationship between the entertainment firm and ValueAct Capital and an information-sharing agreement the two signed earlier this year. The lawsuit says Blackwells needs the books and records to “investigate its credible suspicions of wrongdoing related to Disney’s transactions and ValueAct-related disclosures. “
Disney had completely withdrawn the money it had invested in ValueAct and the company was no longer managing money for the company when ValueAct acquired its stake in Disney last year, a user familiar with ValueAct’s business told Reuters earlier this month.
Earlier this month, the company’s chief investment officer and co-chief executive, Mason Morfit, subsidized the re-election of Disney CEO Bob Iger and Disney’s entire board of directors, ruling out contenders for either hedge fund.
Proxy advisory firm ISS, which guides investor votes, wrote last week: “ValueAct also reported that while its investment team met with Bob Iger at very limited events in the years leading up to his investment in Disney, Mason Morfit and Bob Iger did not. Have a non-public relationship.
Disney said Thursday that “no Disney pension budget has been invested with ValueAct lately and that they were managing any Disney pension budget at the time of entering into an information-sharing agreement with the company. “Disney said it met with Blackwells “to supply documents confirming those facts, but Blackwells declined the meeting. “
A Blackwells spokesperson said, “Shareholders are entitled to full disclosure of dates with ValueAct, including, among other things, all fees paid through Disney during the 10 years preceding the board’s approval of the ValueAct. “
(Reporting via Svea Herbst-Bayliss and Dawn Chmielewski; editing via Costas Pitas and Leslie Adler)