Shareholder activism continues resurgence, with US leading the way
Shareholder activism continued its resurgence in the first three months of 2021 with a second consecutive quarter of heightened activity, according to a new report from investment bank Lazard.
Activists initiated 53 new campaigns globally in Q1 2021, building on the 59 conducted in the previous quarter, reveals the research. That follows a mid-2020 slump in activity, with 41 campaigns in Q2 and just 25 in Q3.
The report includes activist campaigns at companies with a market capitalization of more than $500 mn.
The US market led the way with 37 new campaigns in Q1 2021, accounting for 70 percent of activist activity worldwide, notes Lazard.
‘In contrast to late 2020’s emphasis on mega-cap activity in the US, three quarters of all Q1 2021 activity targeted sub-$10 bn market-cap companies,’ the report authors write, referencing campaigns at TreeHouse Foods and Kohl’s.
In March, TreeHouse Foods reached an agreement with JANA Partners to appoint two new independent directors to the board. Kohl’s last week agreed to bring in two independent directors, following negotiation with a group of activist funds.
The number of new campaigns in Europe dropped to 10 in Q1 2021 after hitting a record of 22 in the final quarter of last year, notes the report. It adds that activity tends to drop off in the quarter after particularly strong activity.
The largest activist funds, such as Elliott Management and Third Point Management, have traditionally accounted for around half of activity in Europe, but in Q1 2020 their involvement fell to just 10 percent, Lazard says.
Smaller funds are ‘increasingly leveraging sophisticated strategies to gain broad shareholder support and successfully target large-cap companies,’ it writes.