Keep an eye on the brewing Disney (DIS) proxy fight now being waged by Nelson Peltz of Trian Partners. It's been a while since we've routinely seen his name in the financial press, but 80-year-old Peltz is taking on Mickey Mouse.
This really got my attention because of Peltz's past dealings.
I first heard his name back in the early 1990s when I owned shares in a mini-conglomerate DWG, which was the parent company of Royal Crown Cola and Arby's. The company was being badly mismanaged at the hands of CEO Victor Posner (this is the short version of the story), and a seemingly valuable package of assets languished as the shares fell sharply.
This was my early intro into sum-of the-parts valuations, and it paid off after Nelson Peltz acquired a large stake in the company, and righted the ship. In 1992, company changed its name to Triarc with Peltz as CEO.
Triarc later acquired Snapple, among other companies.
Fast forward to 2008, when Peltz was behind the Wendy's (WEN) -Arby's merger, in an all-stock transaction, where WEN shareholders received 4.25 Triarc shares for each owned Wendy's. Triarc then changed its name to Wendy's/Arby's Group. By 2011, as I recall, Peltz's Investments firm Trian Partners (formed in 2005) owned more than 25% of Wendy's/Arby's.
The marriage with Arby's was rocky, and in 2011, Arby's was sold to Roark Capital. Trian still owns about 12% of Wendy's, and Peltz is still Chairman of the Board of Directors.
Peltz has been involved in other activist investor pursuits in the ensuing years, including Heinz (which merged with Kraft in 2015 and is now Kraft Heinz (KHC) ), and Procter & Gamble (PG) .
Now, it appears as though Peltz is taking on one of the biggest fights of his career, going after the behemoth that is Disney.
Trian, which currently owns just 0.5% of DIS shares, has nominated Peltz for a Disney board seat. Trian has laid out its case with three major complaints: poor corporate governance, poor strategy & operations, and poor capital allocation. In terms of capital allocation, Trian specifically cites overpaying for 21st Century Fox assets, aggressive bidding for Sky plc.
In addition, Trian is upset with Disney's need to eliminate the dividend the company paid shareholders for more than 50 years due to deteriorating cash flow. Disney last paid an 88-cent quarterly dividend in December 2019.
Peltz has his work cut out for him, but I see his activist pursuit as a positive for DIS, which rose 3.6% on Thursday, and is up 12% so far in 2023, although still down 37% over the past year.
Sit back and watch this unfold. It's still four weeks until pitchers and catchers report to spring training, and once the NFL season wraps up, we'll be in the winter dead-zone.
