Activist investors buoyed by increased success and targeting mid-caps

  • Globally, activist shareholders launched 272 actions in the first six months of this year, putting 2014 on track for a record year after a total of 520 in 2013.
  • Activist investors are becoming increasingly successful in their interventions with companies globally, with 60 per cent achieving their objectives in the first half of this year, compared with 56 per cent throughout 2013.
  • Seeking boardroom representation continues to be the most popular tactic among activists, accounting for 41 per cent of all campaigns in the first half of 2014.
  • Ralph Wollburg, a Düsseldorf partner and head of Linklaters’ Global Corporate Advisory Group said: “Activist investors are becoming more sophisticated and effective in pushing their campaigns forward. We are seeing an increased focus this year on companies in the $250m to $2bn market cap range and across the board, the activists are enjoying increasing success. For the time being, unsuccessful campaigns are the exception.”.

Activist investors are achieving increased success in their interventions with companies, as the number of campaigns looks set to reach record levels in 2014, according to new research commissioned by Linklaters.

Activist shareholders have already launched 272 actions in the six months to the end of June, against 520 interventions in the whole of 2013. The epicentre of publicly disclosed shareholder activism globally is still the US, which was the focus for 81 per cent of campaigns from January to June 2014, although it is thought that a significant proportion of activist campaigns in Europe pass without being made public.

Charles Jacobs, a London M&A partner at Linklaters, said: A key driver behind the rising level of activism is the improving economic environment as we see the return to profitability of many industries globally. This is not only encouraging more investment into the growing universe of activist funds but is also applying pressure on companies to utilise the significant cash on their balance sheets and to engage in M&A activity.”

The global law firm found that 60 per cent of activist campaigns met their objectives in the first six months of this year, compared with 56 per cent throughout 2013. A further 6 per cent of interventions were classed as “partially successful”, which means that activists largely achieved their objectives in two-thirds of their campaigns between 1 January and 30 June 2014.

Just 13 per cent of interventions were unsuccessful in the first half of 2014. Activists reached a compromise or settlement in 15 per cent of their campaigns, and withdrew their demands or board nominations in a combined 6 per cent of interventions. 

Ralph Wollburg, a Düsseldorf partner and head of Linklaters’ Global Corporate Advisory Group said: “Activist investors are becoming more sophisticated and effective in pushing their campaigns forward. We are seeing an increased focus this year on companies in the $250m to $2bn market cap range and across the board, the activists are enjoying increasing success. For the time being, unsuccessful campaigns are the exception.”

According to additional Linklaters’ data, companies with market capitalisations of between $250m and $2bn – were the top target for activists, accounting for over 35 per cent of all campaigns between January and June 2014 (2013: 30 per cent).

The most common tactic of activists was to seek to board representation, which accounted for 41 per cent of all actions in the first half of this year, compared with just 29 per cent over the 12 months to 31 December 2013. Activists deployed this strategy 111 times in the six months to June 2014, following a total of 153 in 2013.

For more information, contact Rupert Winlaw on +44 20 7456 3219.