August 28, 2017

Activism: Mid-Year Update

This Gibson Dunn memo reports the results of its survey of activism during the first half of 2017.  This excerpt is from the intro:

Activism has continued at a vigorous pace thus far in 2017. As compared to the same period in 2016, this mid-year edition of Gibson Dunn’s Activism Update captured more public activist actions (59 vs. 45), more activist investors taking actions (41 vs. 35), and more companies targeted by such actions (50 vs. 38).

During the period from January 1, 2017 to June 30, 2017, seven of the 50 companies targeted faced advances from multiple activists, including two companies that each had three activists make separate demands and two companies that each dealt with activists acting jointly. As for the activists, 10 of the 41 captured by our survey took action at multiple companies. Equity market capitalizations of the target companies ranged from just above the $1 billion minimum covered by this survey to approximately $235 billion, as of June 30, 2017.

Activist priorities included:

– Changes in board composition (68% of campaigns)
– Changes in business strategy (61% of campaigns)
– Activism surrounding M&A (46% of campaigns)
– Governance changes (31% of campaigns)
– Management changes (27% of campaigns)

About 1-in-5 activist campaigns led to a proxy contest during the first half of the year – but none of those contests sought to gain control of the target’s board.  Of the 12 contests reviewed in the survey, 4 went to a vote, with the dissidents winning just once.

John Jenkins