UPDATE: June 9, 2022: Shareholders reelected Hasbro's board Wednesday, giving the toy and entertainment giant's leadership a victory over activist firm Alta Fox, which had been waging a public campaign calling for change and a spinoff of Hasbro's Wizards of the Coast game business.

Alta Fox had nominated its own slate of three directors for the board, after earlier putting forward five. But shareholders voted for all 13 of Hasbro's directors.

Dive Brief:

• As it heads toward a board vote, Hasbro is moving ahead with its own nominees over those picked by activist investor Alta Fox, board chairman Rich Stoddart said in a letter to investors.
• Stoddart also rejected the idea put forward by the hedge fund of spinning off its Wizards of the Coast gaming subsidiary, which owns Dungeons & Dragons and Magic: The Gathering. 
• In his letter, Stoddart said that a spinoff of the unit would be "unlikely to create value, is contrary to Hasbro's strategy, and would negatively impact the benefits Wizards realizes today from Hasbro's Brand Blueprint."

Dive Insight:

Last October, representatives with Alta Fox first reached out to Hasbro requesting a call to discuss the toy and gaming company's business. Within days they met with the investor relations team to discuss a spinoff of Wizards of the Coast, a move that the hedge fund has estimated could be worth $100 per share to investors. 

The unit's revenue generated just under $1.3 billion last year, a 42% increase over the previous year, outperforming in terms of growth its consumer segment that had to grapple with supply chain challenges. Wizards of the Coast also produced the company's new CEO, Chris Cocks, who served as president and chief operating officer of the gaming subsidiary until his appointment as company chief this year. 

Since taking over, Cocks has been pulled into the fight with Alta Fox, which owns 2.5% of Hasbro's stock, over Wizards of the Coast as well as the company's future. Filings by the hedge fund detail its numerous meetings and emails with Hasbro management, including Cocks. 

Starting in February, Alta Fox took its campaign into public view, criticizing Hasbro and its leadership in the common fashion of activist investors. The fund has publicly derided the company's strategic plan as "an abject failure ... punctuated by ill-advised acquisitions, haphazard execution and poor disclosure practices." In its latest filing, Alta Fox chided Hasbro's board for what it called "[s]ignificant complacency and lack of alignment with shareholders," among other things. 

Alta Fox has offered up its own slate of nominees for Hasbro's board, only two of whom the fund would allow Hasbro to interview, according to Stoddart. The company ultimately rejected the fund's director nominees, ultimately putting forward as new nominees its own choices: Elizabeth Hamren, chief operating officer at the communications service Discord, and Blake Jorgensen, an executive at the gaming company Electronic Arts. 

In his own letter to shareholders, Cocks outlined plans for the company's future that revolve around games, multigenerational play and building direct relationships with consumers.  

"Hasbro is a company that believes in long-term investment, consumer-focused brand stewardship, and that doing right for the bottom line means also doing right for the world we do business in," Cocks said.