The number of investor activist campaigns has steadily increased month-on-month since January, bucking the trend of previous years and indicating that momentum for activism is building, according to professional services firm Alvarez & Marsal’s latest A&M Activist Alert.
The number of investor activist campaigns has steadily increased month-on-month since January, bucking the trend of previous years and indicating that momentum for activism is building, according to professional services firm Alvarez & Marsal’s (A&M) latest A&M Activist Alert.
In May, A&M’s research found that there were 25 campaigns launched across Europe, more than double the number in January (12), and for the first time, there are now more than 100 funds adopting activist tactics in Europe.
The UK remains the top market for activist activity, followed by Germany, with 24 and 21 campaigns respectively so far this year.
There have been more environmental campaigns than ever before in 2023, with 17 in total, accounting for 12% of all activist campaigns, compared to just 4% in 2019, while the number of M&A-related campaigns have fallen, down to 11% of total campaigns against an average of 20% in the previous four years, owing to a subdued deals market, according to M&A. Instead, activists are increasingly focusing on operational, strategic or capital management opportunities to create value.
The Consumer sector has vied with Industrials as the most attractive sector for activists, with 18 campaigns since January including against Carlsberg and Nestlé. The rise of campaigns against Communications and Technology corporates in Europe has also been notable, with 13 campaigns in the Communications sector launched so far this year, against the likes of Vodafone in the UK, Cellnex in Spain, and Temenos in Germany.
Similarly, Healthcare companies have been in the spotlight with 12 campaigns launched against targets including Alkermes and Abcam.
And there could be more activism to come too, with the A&M research identifying 143 corporates that are predicted to be at heightened risk of public shareholder activism, unless urgent action is taken to address the underlying performance challenges.
Activists will likely continue to hone their focus on “Big 5” European markets of the UK, Germany, France, Switzerland and Scandinavia, according to A&M, with the UK and Germany continuing to be the most targeted markets given their relative underperformance against global peers, particularly on margins, returns on capital and revenues per employee. A&M is predicting that 49 UK companies are at risk of activist campaigns in the next 18 months, with 33 in Germany.
In the UK, activists are expected to focus on the Industrials and Consumer sectors, making up more than half of the predicted targets. Operational underperformance, both at corporate and divisional levels, will be under close scrutiny. Environmentally and socially focused campaigns will also impact these sectors, with a focus on net zero transition and supply chain transparency in particular.
