Activist investors wage record number of campaigns in Europe
British companies prove especially vulnerable to restive shareholders
Activist investors waged a record number of campaigns against European companies in the first half of the year, with British companies proving especially vulnerable to restive shareholders.
There were 35 activist campaigns targeted at companies in Europe during the period, according to data compiled by investment bank Lazard, up 67 per cent from the previous year. UK companies represented more than a third of all targets.
“Activist investors love value stories and Europe has been operating at relatively lower valuations,” said Mary Ann Deignan, managing director and head of capital markets advisory at Lazard, which counts an activist campaign once it has been made public. “But I also think we are seeing a longer-term trend of increasing activity in Europe.”
Activists have targeted several big British companies, including consumer goods business Unilever, which in May added Nelson Peltz to its board after his firm Trian Partners built a 1.5 per cent stake in the company.
Shell, the oil major, was the subject of a campaign from London-based Odey Asset Management, which has urged the company to drop its appeal against a landmark Dutch court ruling targeting its climate strategy.
Shell is also contending with pressure from US hedge fund Third Point, which has called on it to split into two businesses — a legacy oil and chemicals business and a green arm focused on the future.
HSBC is also facing demands to break up, with the bank’s largest shareholder, Chinese insurer Ping An, wanting it to separate its Asian business from its western operations in an effort to boost years of lacklustre investor returns.
France, which accounted for 20 per cent of such campaigns in Europe during the first half of the year, has also become an increasingly popular destination for activists, according to Lazard. The proportion of campaigns accounted for by the country had tripled over the past five years, the investment bank said.
While the number of activist campaigns in Europe reached a high in the second quarter, there was a reduction in the number of US companies being targeted. There were 22 new campaigns against American companies between April and June, down 50 per cent from the first quarter, Lazard said.
“It’s a tale of two markets,” said Deignan. “The US was extremely strong in the first quarter and Europe less so. Now we’ve seen a reversal of that trend.”
However, Deignan said it would take more time to determine whether the figures signalled a long-term shift.
Even as dealmaking has cooled down, many activists are still focused on forcing executives to sell the company they run, either outright or in part.
The number of campaigns focused on forcing a company to sell this year is on track to surpass the total recorded in 2021. Activists are also pushing management teams to implement new business strategies and improve capital allocation in light of the worsening economic backdrop.