After months of feuding with the state’s Republican governor, the Walt Disney company announced Thursday that it is canceling plans to build a new employee campus in Florida and will no longer require thousands of employees to relocate there from California.

According to several reports, the chairman of the company’s parks, experiences, and products division, Josh D’Amaro, said in a memo to company employees that “changing business conditions” necessitated the move and that it “was not an easy decision to make, but I believe it is the right one.”

The proposed $900 million campus was slated to include 1.8 million square feet of office space across eight buildings on 60 acres in Lake Nona, not far from Orlando. Some 2,000 employees were scheduled to be relocated when the project was completed. When the plan was first announced, Mr. D’Amaro cited the state’s “business-friendly climate” as one of the reasons it was going forward.  

The plans were first unveiled in 2021 by the CEO at the time, Bob Chapek, and the campus was originally scheduled to open by this year but was delayed until 2026. Many employees reportedly resisted the move from the company’s headquarters at Burbank, California, but those who did make the move will be eligible to return to California, Mr. D’Amaro said in the memo.

The company’s current CEO, Bob Iger, replaced Mr. Chapek in November, and has escalated a feud with Governor DeSantis started by his predecessor after the governor signed legislation limiting instruction on sexual and gender identity in the state’s public schools, a bill that many of Disney’s employees found objectionable. Many took to deriding it as Florida’s “Don’t Say Gay” law.

Last month, Disney sued Mr. DeSantis and several other state officials, alleging that they have mounted a “relentless campaign to weaponize government power” against the company because it expressed a political viewpoint with which he and other state officials disagreed.

“There is no room for disagreement about what happened here: Disney expressed its opinion on state legislation and was then punished by the State for doing so,” the company said in the complaint. “And Disney now is forced to defend itself against a State weaponizing its power to inflict political punishment.”

Hours before the lawsuit was filed, a board hand-picked by Mr. DeSantis to manage the special tax district enjoyed by Disney since the 1960s — the Reedy Creek Improvement District — voted to declare “void and unenforceable” a covenant that the board’s previous directors passed immediately before the state took it over.

Last week, in an amendment to its initial complaint, Disney said Mr. DeSantis and the Republican-led legislature are continuing their campaign to retaliate against the company. Disney cited recent legislation taking aim at the company’s monorail system as evidence that “Governor DeSantis and his allies have no apparent intent to moderate their retaliatory campaign any time soon.”

In an earnings call with Wall Street analysts last week, Mr. Iger said Disney had a “terrific relationship” with the state for the past five decades and is the largest taxpayer in central Florida, paying $1.1 billion in state and local taxes yearly. That has changed since Mr. DeSantis began his campaign against the company, he said.

“We all know there was no concerted effort to do anything to dismantle what was once called Reedy Creek special district until we spoke out on the legislation,” he said. “So this is plainly a matter of retaliation while the rest of the Florida special districts continue operating basically as they were.” 

In his memo, Mr. D’Amaro said Disney’s plans to invest as much as $17 billion in Florida over the next decade — investments that would create 13,000 new jobs in the state — are unchanged. The company currently employs more than 75,000 people in the state.