Nelson Peltz, the billionaire founder of activist firm Trian Partners, has increased his stake in Disney and is expected to ask for multiple board seats, including one for himself, The Wall Street Journal reported. Peltz has been buying shares near decade lows and believes shares are "significantly undervalued" despite a majority of investors' wavering belief: 'Disney has lost its magic.'
Peltz has boosted his stake in Disney from approximately 6.4 million shares to more than 30 million shares in recent months, making him one of the largest shareholders, according to people with direct knowledge of the matter. New York-based Trian, which manages $9 billion, plans to request two seats on the Disney board, including one for Peltz, said the people.
"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," the people said.
WSJ's report slightly boosted Disney shares in premarket trading, up about 1.5%. However, shares are trading at 2014 levels in the low 80s.
Peltz has been "pushing Disney to plan for a successor to Chief Executive Bob Iger, who had held that role since 2005 before passing the reins to Bob Chapek in 2020, Last year, just as Peltz was kicking off his campaign, Chapek was fired by the board and Iger was brought back. Iger recently agreed to stay in his position through 2026," WSJ noted.
Trian has railed against Disney's "broken" succession plan, pointed out wasteful spending across the streaming business, and criticized the media and entertainment conglomerate's disastrous 2018 acquisition of 21st Century Fox.
In February, Peltz halted his fight with Disney. He told WSJ that Iger needs to deliver on his commitments to revitalize Disney.
Iger has been taking steps to reverse the stock decline, some geared toward achieving profitability for Disney's streaming segment by September of next year, a target set forth in late 2020. In August, the company unveiled a round of major price increases for its streaming products, raising the cost of the ad-free versions of Disney+ and Hulu by more than 20% each. -WSJ
Not only has Disney's streaming business slowed, but visitors at theme parks have also declined, as well as a slump at the box office.
Iger has previously said he would cut billions of dollars in fat, resulting in thousands of job losses. If the board approves Trian for two board spots, more cuts are coming down the pipe, in an attempt to turn the sinking ship around.
Maybe Disney going super 'woke' had something with it losing its magic.
Peltz is best known for activist campaigns against Unilever, Procter & Gamble, and Wendy's.
