Disney stock higher as billionaire Nelson Peltz ads firepower to board seat battle

Updated 9:44 am EDT

Walt Disney  (DIS) - Get Free Report moved higher in early Monday trading following a report that suggested billionaire activist Nelson Peltz has acquired extra firepower in his attempt to win seats on the board of the media and entertainment giant. 

The Wall Street Journal reported Monday that Peltz has reached a deal with former Disney executive Isaac Perlmutter that gives Peltz's Trian Fund Management control and voting power over the former Marvel Entertainment chairman's stake.

Peltz, who has been pushing for a seat on the board since late last year, now has around four times the voting shares he had when he first pushed for a Disney board seat earlier this year, the Journal reported. 

Earlier this month, the paper also reported that Peltz had lifted his stake in the group to around $2.5 billion, nearly four times the level he held at the end of the second quarter.

Perlmutter sold Marvel to Disney in 2009 for around $4.2 billion, reportedly amassing a stake in the group that's now valued at around $2.4 billion. 

“While I was a Disney employee, I was not comfortable publicly stating my views on the company and its performance,” Perlmutter said in statement to the Journal. “As someone with a large economic interest in Disney’s success, I can no longer watch the business underachieve its great potential.”

Disney shares were marked 0.85% higher in early Monday trading to change hands at $80.02 each, a move that still leaves the stock down more than 20% over the past six months. 

Peltz has spoken publicly about a CEO succession plan, the improvement of operating margins at the group's direct-to-consumer business and the reinstatement of the company's dividend by 2025. He had backed off his push for board representation following a series of cost reductions and job cuts that Chief Executive Bob Iger laid out in February.

Peltz described Disney as having an "incredible legacy as one of the leading and most successful consumer entertainment companies in the world" in early January. 

But he argued that in recent years the company had "lost its way resulting in a rapid deterioration in its financial performance from a consistent dividend-paying, high free cash flow generative business into a highly leveraged enterprise with reduced earnings power and weak free cash flow conversion."

Last month, Disney unveiled surprise plans to double investment in its parks and cruise line business, telling an investor day event that it would allocate $60 billion over the next 10 years to "expand and enhance" its Parks & Experiences division.

Parks and Experiences delivered around $8.3 billion in third quarter revenue, Disney reported last month, up 13% from the prior year period and around 37% of the group's overall total.

But in terms of operating income, the division was and remains its most-profitable: Parks and Experiences generated $2.425 billion in operating profit, an 11% increase from a year earlier, offsetting an 18% decline in the group's Media and Entertainment Distribution segment. 

The group will report its September quarter earnings on Nov. 8.

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