One in twenty European companies have faced an activist campaign in the past five years has been saved
One in twenty European companies have faced an activist campaign in the past five years
10 February 2020
- This is only half the one in ten US companies that had an activist campaign
- Activist investors leverage $340bn of current holdings to support demands made over the past 5 years, up 17% on this time last year
One in twenty European companies with a market capitalisation over $250 million have been subjected to a campaign by activist investors in the past five years, according to new research from Deloitte. This is half the rate (one in ten) for similar size companies in the US over the same time-period, which may indicate activism in Europe still has some way to go.
Specifically, 4% of the London Stock Exchange has been subject to an activist investor campaign in past five years, compared to 10% in the US.
Consumer & Services companies with a market capitalisation over $50 billion were the most popular for US activists, with more than 1 in 4 targeted in the last five years.
Jason Caulfield, head of Value Creation Services at Deloitte, said: “With levels of activist investor campaigns running at half those in the States, we predict a great deal more activity in Europe to come, now that the US funds have set up shop here.
“To date, it is the smaller companies that have disproportionately avoided activist campaigns, and we would expect non-US mid-size company penetration rates to catch up as more home-grown activists emerge. The interest in Consumer & Services companies demonstrates the attractiveness of sectors where M&A can be an especially effective and readily achievable activist strategy.
“Plenty of money has been set aside for shareholder activism, the value of which has only risen alongside share prices. Therefore we would expect the number of global activist campaigns to bounce back up in 2020, after seeing a slight slowdown in 2019.”
In terms of firepower - $340bn of holdings globally have been leveraged for activist investors over the past five years, from 2014-2019. This represents a 17% increase on the $291bn recorded for 2013-2018 last year, in part reflecting rises in market-wide share prices.
Jason Caulfield concludes: “Our analysis suggests how certain activities and company characteristics increase exposure to the risk of a campaign before any underlying strategic change can be put in place to prevent it. Even if it is too late to avoid the interest of an activist investor, there are still useful steps to be taken to retain control over the process.”
Notes to editors
About the report
An ‘activist investor’ (or shareholder) is an individual or group that typically purchases/owns a single-digit percentage of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change within the company.
Deloitte’s report analyses public listed company constituents of the major US, European and other selected markets with a market capitalisation over $250m to see which have attracted financially minded activist investors over the last five years.
The ‘global holdings’ are current - with the demands having been made mostly in the last 12-24 months, but some over the last five years.
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Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
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