It is not in times of crisis that activists shut up and let things happen. These shareholders, who tend to disturb companies in their official strategy by demanding major changes, have launched 69 new campaigns during the first three months of the year. This is a high level and American companies have been left out in these new campaigns.
The trend is rather to make things happen in European companies. And while activist funds may remain silent for many years, at many companies it seems that the time has come to get out of the woods. In Europe alone, 21 new campaigns were launched, the busiest quarter ever, according to Lazard’s latest quarterly study.
Many family groups in Europe
In difficult economic times, investors look for deals that really make sense and encourage companies to focus on their core business. “We are witnessing more activism in Europe this year, because the environment is comparatively more favorable to invest, to the extent that there are more entry points for activists, and in particular conglomerates, with a portfolio of activities than activists. might criticize,” explains Christopher Couvelier, managing director in charge of shareholder advisory business.
Europe is also distinguished by the number of family groups present on the continent. Blessed bread for the activists who demand, in most cases, portfolio reviews and asset disposals to clarify the company’s activities and take advantage of better valuations.
A pack hunting strategy
What is new is the pack-hunt strategy of activist funds. “Sometimes three or four activists are present at the capital of a company. And even without having large stakes, they can manage to mobilize other shareholders”, continues the analyst.
One of the best examples currently underway is the campaign launched against Bayer. German conglomerate that brings together health and agri-food activities, the Bluebell and Inclusive Capital funds, which entered the capital at the beginning of the year, campaign for the split of both activities. They are joined by Elliott Management, present for several years. By splitting up the activities, the activists hope that the company can be valued at its fair value and ultimately see their investment prosper.
Since the start of monetary tightening in the US and Europe, interest rates have lowered company valuations, especially in the technology sector. Some companies are more vulnerable and activists see this as an opportunity to step up their attacks and demand change. If France is, at the beginning of the year, rather safe, it is because the campaigns launched last year have not yet been successful; but it’s likely just a short-lived respite, according to the authors of the Lazard study.
Source: BFM TV
