The prospect of a renewed proxy battle between The Walt Disney Co. and an activist investor has not had much of an effect on the company’s share price.
The price of shares in the Burbank entertainment and media giant went up about 3% on Friday, Oct. 6, in advance of the news that Nelson Peltz, an activist investor, had boosted his stake in Disney.
The following Monday, Disney’s stock rose by $1.76 to a close of $84.70 and bounced in the $84 to $85 range for much of the week. The share price closed at $84.35 on Oct. 12.
Peltz, who owns Trian Fund Management, now has a $2.5 billion stake in Disney and is reportedly seeking multiple board seats, including one for himself, according to reporting in the Wall Street Journal, citing sources familiar with the matter.
If Disney says no, Trian could nominate directors that would be voted on at Disney’s annual meeting next spring, according to the Journal’s story. Peltz reportedly launched a run for a seat on Disney’s board earlier this year after the company privately rebuffed his request to become a director. “It was a short-lived battle, however, with Peltz withdrawing his nomination in February after Disney unveiled a broad reorganization and cost-cutting plan that sent the stock up briefly,” the Journal story said.
The Journal and other media outlets reported that Peltz is looking to bolster his position with Disney.
“Trian thinks that Disney shares are significantly undervalued today and that the company needs a board that is more focused, aligned with shareholders and accountable,” according to the Wall Street Journal story.
Disney’s stock is down this year and far below the $100-plus levels it enjoyed when Disney Chief Executive Bob Iger announced his plan to lower costs earlier this year.
The last time Disney’s stock was above $100 was on May 10, when it closed at $101.14 – the same day Disney reported its fiscal second-quarter earnings after the market closed. The stock dropped by nearly 9% the following day and closed at $92.31.
Disney reported it had matched on earnings and revenue for the fiscal second quarter and trimmed its operating loss by $200 million in the direct-to-consumer business, which includes streaming operations.
When reporting its fiscal third-quarter financials on Aug. 9, the company’s stock closed at $87.49. On the following day, shares rose by about 5% to $91.76.
Disney handily beat Wall Street expectations on earnings but missed on revenue for the fiscal third quarter despite its growth. On Aug. 9 Disney reported adjusted net income of $2.2 billion ($1.03 a share) for the quarter ending on July 1, compared with adjusted net income of $2.1 billion ($1.09) in the same period a year earlier. Revenue grew by 4% from the third quarter of the prior year to $22.3 billion.
Analysts on average expected earnings of 95 cents on revenue of $22.5 billion, according to Refinitiv.
