Activist investors are reframing the M&A landscape
From first timers to the old hands, more activists than ever opposed company decisions or policies last year and there is no sign that investors will let up.
If anything, some of the most high-profile funds are likely to start 2020 emboldened by evidence in favour of their approach with activist investors’ plays emerging as one of the best performing strategies last year.
“It’s a reflection of this movement of aggressive shareholder behaviour moving into the mainstream,” Jim Rossman, head of shareholder advisory at Lazard told the FT. “It’s totally destigmatised behaviour to wage a campaign.”
Here are the main takeaways from Lazard’s year-end report on the state of shareholder activism:
A record 147 investors launched new campaigns last year, 43 of whom had no prior activism history.
A record 99 campaigns were related to M&A, accounting for almost half of all activist activity in 2019.
Japanese corporates were the most targeted outside of the US, with 19 campaigns and $4.5bn in capital deployed in 2019. Meanwhile, activity in Europe decreased to 48 campaigns, down from a record 57 in 2018.
20 per cent of activist board seats went to female directors, compared to a rate of 46 per cent for all new S&P 500 director appointees.
Elliott Management and Starboard Value remain the biggest players in the field. Together, they accounted for 10 per cent of all global campaign activity.
Elliott has been a trailblazer in historically hostile environments like Japan, France and Germany. Overall, 40 per cent of activist campaigns last year were waged overseas.
That doesn’t mean US companies can breathe easy. It’s no longer just the usual crowd they have to look out for as shareholders who tend to stay behind the scenes have now started speaking out.
Wellington Management last year publicly opposed Bristol-Myers Squibb’s acquisition of Celgene in an unusual move that had a lot of companies calling up their lawyers.
If it’s any consolation, the total number of companies targeted was 187 last year, 17 per cent less compared with 2018. The amount of money invested to win governance and strategy changes at companies also declined from $66.4bn to $42.2bn in the same period.
Public companies should build a moat, get their ducks in a row and keep their guard up because boardroom raiders aren’t going anywhere. They’re proliferating.