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Blackwells Group has sued Walt Disney (NYSE:DIS) in Delaware court, amping up the firm's battle over the Disney board of directors just days before the critical shareholder vote.
Blackwells is one of two firms looking to place directors in Disney board seats: It's nominated three candidates for the board, while Nelson Peltz's Trian Group is seeking two seats.
The new litigation, a section 220 complaint, seeks to compel the handover of Disney's records about its relationship with ValueAct Capital, an activist investor that has backed Disney's board candidates.
Disney (DIS) didn't properly disclose its financial ties to ValueAct, Blackwells says, and it's pursuing action to inspect "books and records in order to determine whether wrongdoing, mismanagement, or breaches of fiduciary duty, including potential violations of disclosure obligations under the federal securities laws, have taken place," according to its complaint.
"The Disney proxy contest is about governance for the future," Blackwells said in a statement.
"Blackwells has consistently shown that it is trying to give shareholders an alternative, primarily to Nelson Peltz. However, the incumbent Disney Board has not done itself any favors by touting the agreement with ValueAct in their hopes to sway shareholders. Shareholders are entitled to full disclosure about the ValueAct relationship including, among other things, all fees paid to it by Disney in the 10-year period leading up to ValueAct's endorsement of the Board," the firm said.
ValueAct took a stake in Disney (DIS) over the second half of last year, and the two entered an information sharing agreement alongside ValueAct's promise of support for Disney's director slate.
Among the most recent developments in the board battle, investment adviser Egan-Jones backed Trian's nominees. Among other proxy advisers, Glass Lewis is backing Disney's director slate in full, while ISS is supporting the election of Peltz but not Trian's other candidate, Jay Rasulo.
Disney's (DIS) annual meeting is set for Wednesday, April 3.
Updated: Disney (DIS) responded to the suit. “The claims made by Blackwells Capital are baseless, and this is merely their desperate attempt to gain attention for their slate of director candidates," a spokesperson told Seeking Alpha. "No Disney pension plan funds are currently invested with ValueAct nor were they managing any Disney pension plan funds at the time of their entering into an information-sharing agreement with the company. Prior to Blackwells filing this litigation, Disney offered to meet with them and provide documentation confirming those facts, but Blackwells declined the meeting.”