Expect More ESG Activism and SPACs in 2021
This year saw muted activist activity due to the coronavirus pandemic, but activists are gearing up for 2021. They plan to return to campaigns that may have been upended, as well as new opportunities emerging from the recent uneven economic recovery.
Some themes aren’t too surprising. Activists are still expected to push companies to improve the performance of noncore businesses or divest them, Cas Sydorowitz, Global Head of Activism at Georgeson, tells Barron’s. Companies will also face pressure to offload investments in noncore businesses, as Dan Loeb’s Third Point tried to push Nestlé to sell its stake in L’Oréal three years ago.
The new year will also see a continuation of recent trends that have bubbled up this year.
ESG-focused activism and shareholder proposals will keep rising, Sydorowitz says. But things will be a bit different, as it will be third parties organizing investors, not just traditional shareholder activists pushing for change.
More special-purpose acquisition companies could be rolled out, as well. Loeb launched a SPAC two years ago, but this year saw a flood of such vehicles from frequent activists. Bill Ackman of Pershing Square, Jeff Smith of Starboard Value, and former hedge fund manager Cliff Robbins have all launched SPACs in recent months.
“It’s almost a form of permanent capital for activists,” Sydorowitz says.