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Tag: Proxy Fight

  • Paramount files lawsuit in pursuit of Warner Bros. Discovery and threatens proxy fight

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    Paramount is taking its pursuit of Warner Bros. Discovery to court.On Monday, Paramount CEO David Ellison announced a lawsuit in Delaware Chancery Court, where shareholders typically bring corporate disputes, as it attempts a hostile takeover of the iconic entertainment company.Ellison criticized Warner Bros. Discovery, also known as WBD, for a “lack of transparency” around its decision to favor Netflix’s bid for Warner Bros. and HBO.A WBD spokesperson had no immediate response, but an escalation in the form of a lawsuit had been predicted by Wall Street analysts.Ellison has been trying for months to buy all of WBD, but his entreaties have been rebuffed.So he is trying to gain control of WBD by offering to buy up shares for $30 each, and he is also threatening a proxy fight, vowing to nominate a Paramount-friendly slate of board members to take over the WBD board.Those board members, he said, would “exercise WBD’s right under the Netflix agreement to engage on Paramount’s offer and enter into a transaction with Paramount.”The proxy fight is a backup plan of sorts, in case a sufficient number of WBD shareholders don’t agree to sell their shares to Paramount in the coming weeks.Warner’s annual shareholder meeting has yet to be scheduled. Last year, it took place in June.WBD has said that it is moving forward with its signed agreement to sell its Warner Bros. and HBO assets to Netflix for $27.75 per share, with $23.25 in cash and the rest in Netflix stock.Netflix said last week that it is in talks with U.S. and EU regulators to receive the necessary approvals for the deal.But Paramount’s hostile takeover bid means that a giant question mark looms over the entire media empire.Ellison said on Monday that WBD’s decision-making “just doesn’t add up — much like the math on how WBD continues to favor taking less than our $30 per share all-cash offer for its shareholders.”WBD has raised a variety of concerns about Paramount’s debt financing, onerous conditions connected to the bid and other matters.The WBD board has also cited the potential value of its cable assets, which Netflix is not acquiring. Those channels, including CNN, are being broken off into a new, publicly traded company called Discovery Global this summer.Paramount has argued that the channels have little equity value. The lawsuit in Delaware will pursue more information about the valuation “so that,” Ellison said, “WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”Major WBD shareholders have been split over Paramount, with some calling it a superior bid and others siding with the Netflix deal.Meanwhile, President Trump has said that he will be personally involved in reviewing any merger, raising questions about whether his personal predilections will come into play.Over the weekend, he posted a link on Truth Social to a month-old opinion piece from One America News Network titled “Stop The Netflix Cultural Takeover.” The column said “it is time to say no to a woke media monopoly.”Netflix has exuded confidence in its ability to get the deal across the finish line in the next 12 to 18 months.

    Paramount is taking its pursuit of Warner Bros. Discovery to court.

    On Monday, Paramount CEO David Ellison announced a lawsuit in Delaware Chancery Court, where shareholders typically bring corporate disputes, as it attempts a hostile takeover of the iconic entertainment company.

    Ellison criticized Warner Bros. Discovery, also known as WBD, for a “lack of transparency” around its decision to favor Netflix’s bid for Warner Bros. and HBO.

    A WBD spokesperson had no immediate response, but an escalation in the form of a lawsuit had been predicted by Wall Street analysts.

    Ellison has been trying for months to buy all of WBD, but his entreaties have been rebuffed.

    So he is trying to gain control of WBD by offering to buy up shares for $30 each, and he is also threatening a proxy fight, vowing to nominate a Paramount-friendly slate of board members to take over the WBD board.

    Those board members, he said, would “exercise WBD’s right under the Netflix agreement to engage on Paramount’s offer and enter into a transaction with Paramount.”

    The proxy fight is a backup plan of sorts, in case a sufficient number of WBD shareholders don’t agree to sell their shares to Paramount in the coming weeks.

    Warner’s annual shareholder meeting has yet to be scheduled. Last year, it took place in June.

    WBD has said that it is moving forward with its signed agreement to sell its Warner Bros. and HBO assets to Netflix for $27.75 per share, with $23.25 in cash and the rest in Netflix stock.

    Netflix said last week that it is in talks with U.S. and EU regulators to receive the necessary approvals for the deal.

    But Paramount’s hostile takeover bid means that a giant question mark looms over the entire media empire.

    Ellison said on Monday that WBD’s decision-making “just doesn’t add up — much like the math on how WBD continues to favor taking less than our $30 per share all-cash offer for its shareholders.”

    WBD has raised a variety of concerns about Paramount’s debt financing, onerous conditions connected to the bid and other matters.

    The WBD board has also cited the potential value of its cable assets, which Netflix is not acquiring. Those channels, including CNN, are being broken off into a new, publicly traded company called Discovery Global this summer.

    Paramount has argued that the channels have little equity value. The lawsuit in Delaware will pursue more information about the valuation “so that,” Ellison said, “WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”

    Major WBD shareholders have been split over Paramount, with some calling it a superior bid and others siding with the Netflix deal.

    Meanwhile, President Trump has said that he will be personally involved in reviewing any merger, raising questions about whether his personal predilections will come into play.

    Over the weekend, he posted a link on Truth Social to a month-old opinion piece from One America News Network titled “Stop The Netflix Cultural Takeover.” The column said “it is time to say no to a woke media monopoly.”

    Netflix has exuded confidence in its ability to get the deal across the finish line in the next 12 to 18 months.

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  • Longtime Cracker Barrel foe urges shareholders to vote against ‘worse than mediocre’ CEO after dismal earnings | Fortune

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    Activist investor Sardar Biglari launched his eighth proxy battle at Cracker Barrel after the dining chain reported disappointing fourth-quarter earnings on Wednesday. In a filing on Thursday, Biglari, who is also the CEO of Steak n’ Shake, urged shareholders to vote against the re-election of Cracker Barrel CEO Julie Masino and railed against the chain’s management, which he deemed “worse than mediocre.” 

    Biglari’s latest campaign is part of a 14-year entanglement with Cracker Barrel in which he has repeatedly failed to get himself elected as a director. He has, however, managed to elect two candidates of his choosing (in 2022 and 2024), while fighting against his proxy battles has cost Cracker Barrel millions. Even this was cause for criticism from Biglari: “The Board has spent $31 million of shareholders’ money to prevent one of its largest shareholders [Biglari] from having a minority voice. Now the Company has become a laughingstock.”

    For many years, Biglari was one of the company’s largest shareholders, at one point owning nearly 20% of Cracker Barrel’s shares. He has since sold off much of his stake, and disclosed ownership of a 2.9% stake in the proxy filing. 

    The restaurant chain’s fourth quarter earnings disclosed a miss on earnings per share, falling short on earnings per share while beating on revenue and projecting weaker customer traffic in the year ahead.

    Cracker Barrel’s stock fell approximately 10% in after hours trading and was down more than 8% at time of publication. 

    Biglari, who is also the CEO of Biglari Holdings, which also controls Maxim magazine, isn’t going away. On Thursday, he urged shareholders to vote against the board’s directors, whom he accused of “severe destruction of shareholder value,” an inability to understand Cracker Barrel’s brand, and a failure to select a suitable CEO. 

    “Instead of demonstrating the discipline and stewardship required to protect and enhance a storied brand, management has relied on ill-conceived strategies that have worsened existing challenges rather than solved them, culminating in the disastrous “brand refresh” that has ranked among this century’s worst brand blunders alongside Bud Light and Jaguar,” he wrote. “CEO Julie Masino’s tenure has been marked by repeated and highly publicized missteps, from misguided rebranding efforts to ill-fated “transformation” initiatives, that reflect the Company’s troubling pattern of tone-deafness and disregard for shareholder capital.” 

    Biglari also took aim at the Cracker Barrel board’s marketing expert, Gilbert Dávila, whom he accused of being responsible for the chain’s struggles, and “eroding shareholder value” by approving “outsized pay packages” for Cracker Barrel executives. 

    “Shareholders can send a message that merit and performance, the foundation that built America, rank above DEI,” he continued. 

    Cracker Barrel has dismissed Biglari’s antics, previously telling Fortune that the activist investor has made “numerous false and misleading claims about Cracker Barrel, its Board and management.” Shareholders have rejected nearly all of his proposals.

    In June, The Wall Street Journal reported that many Cracker Barrel customers were mourning the “loss of that old-timey feeling,” and the uproar escalated in August after a particular tweet by Donald Trump Jr., highlighting allegations that the rebrand was “woke.” The market reaction alone wiped out roughly $100 million from the chain’s value. At issue was, in part, the new logo that did away with the traditional “Uncle Herschel” mascot—a denim-clad old man perched on a chair beside a barrel. 

    The redesign, which was a key part of Cracker Barrel’s $700 million modernization campaign—and was intended to reverse an outflow of customers from the chain, performance that Biglari has criticized for years—immediately ignited controversy, drawing outrage from longtime diners, Biglari, and even President Trump. Biglari used his restaurant’s social media accounts to troll Cracker Barrel over the blunder. 

    Cracker Barrel quickly reversed course, ditching the rebranding and suspending its planned restaurant renovations. The company’s stock is down roughly 17% year-to-date. 

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    Lily Mae Lazarus

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  • Disney Highlights Former Marvel Chief Ike Perlmutter’s “Difficult History With Bob Iger” In Latest Proxy War Salvo

    Disney Highlights Former Marvel Chief Ike Perlmutter’s “Difficult History With Bob Iger” In Latest Proxy War Salvo

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    Disney’s latest salvo in a proxy fight with activist investor Trian Fund Management highlights the firm’s “silent partner” Ike Perlmutter and his “difficult history with Bob Iger.”

    That critique came in a 20-page slide deck, a follow-up to an anti-Trian video released by Disney earlier this week. The clash has intensified ahead of Disney’s annual shareholder meeting on April 3. The new slide deck, titled “Correcting Trian’s Fiction With Facts,” revisits a number of prior arguments, many of which were included in the video. (Trian laid out its case in a 130-page white paper earlier this month.)

    For Hollywood observers in particular, though, Disney’s take on former Marvel boss Perlmutter is intriguing. It also cuts a bit deeper than previous public comments on the former exec by Iger and the company.

    Perlmutter, who has long been friendly with Trian co-founder and front man Nelson Peltz, has been the firm’s “silent partner” in the effort to secure board seats for Peltz and ex-Disney CFO Jay Rasulo, Disney maintains. “The former Perlmutter’s fraught history with Bob Iger appears to have driven his collaboration with Peltz to run a proxy contest,” the document states, noting that Perlmutter owns about 79% of the shares Peltz “claims” to own.

    Trian “neglected to address Perlmutter’s well-chronicled, difficult history with Bob Iger and many Disney
    employees, which is a highly relevant consideration for shareholders,” in Disney’s view. The firm “has said little about the role and influence of Perlmutter — it is not credible that Perlmutter is truly just sitting on the sidelines.”

    Perlmutter’s oversight of Marvel’s studio “was severed in 2015,” the document continues. The parting was “due to his ongoing antagonization of the creative team and vehement opposition to expanding the group’s output to films like Black Panther and Captain Marvel.” Those films went on to gross $1.3 billion and $1.1 billion at the global box office, respectively.

    Ties with Perlmutter were completely cut in March 2023 “as part of the company’s cost reduction program,” the slide deck unsentimentally adds. His alignment with Peltz and the campaign to dislodge Iger began soon thereafter.

    Rasulo doesn’t escape scrutiny in the latest blast from Burbank. The former CFO, who left Disney in 2015 after being passed over for the CEO role, and Peltz “do not add incremental skills to Disney’s board,” Disney asserts. Since Rasulo joined the board of iHeartMedia, the company’s performance metrics have only gotten worse, and the exec “failed to address streaming’s challenge to legacy radio.”

    The exec “did not drive” either strategy or succession planning at Disney, the company says, and he “has no credible succession planning experience.”

    Trian has made succession a key aspect of its criticism of Disney. Since returning as CEO in November 2022, Iger has repeatedly said a formal process of succession planning is under way and that he will pass the baton for certain at the end of his current contract in 2026. Trian has noted his multiple reversals of previously stated plans to step down during his 14-year initial run as CEO, as well as his decision to hand control to Bob Chapek in 2020. Chapek ended up being ousted by the board after a series of missteps and increasing concern by Iger about the direction of the company.

    Meanwhile, as the proxy saber-rattling continues, a notable business figure has aligned with Iger. JPMorgan Chase CEO Jamie Dimon, a highly influential figure in banking and finance circles, sent a statement to CNBC laying out his rationale.

    “Bob is a first-class executive and outstanding leader who I’ve known for decades,” Dimon said in the statement. “He knows the media and entertainment business cold and has the successful track record to prove it. It’s a complicated industry filled with creative talent, requiring the unique expertise and engagement skills that Bob possesses. Putting people on a Board unnecessarily can harm a company. I don’t know why shareholders would take that risk, especially given the significant progress the company has made since Bob came back.”

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    Dade Hayes

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