April 15, 2019

Activism: First Quarter Highlights

This Lazard report reviews shareholder activism during 2019’s first quarter. Here are some of the highlights:

– Q1 2019’s campaign activity (57 new campaigns against 53 companies) was down year-over-year relative to 2018’s record pace, but in line with multi-year average levels. Capital deployed in Q1 2019 ($11.3bn) was in line with recent quarters, and the top 10 activists had a cumulative $75.5bn deployed in public activist positions (new and existing)1at the end of the quarter

– Starboard overtook Elliott as the most prolific activist in Q1 2019, launching seven new campaigns.

– Transaction-focused campaigns were by far the most common in Q1 2019, with an M&A-related objective arising in nearly 50% of all new campaigns. Pushes to sell the company (e.g., Caesars, Zayo) or engage in break-up or divestiture transactions (e.g, Dollar Tree, eBay) were the most frequent M&A objectives.

– Attempts to scuttle or sweeten existing deals were relatively less frequent than in prior quarters.

– Activists won 39 board seats in Q1 2019, down from a record-breaking 65 in Q1 2018. All Board seats won were secured via settlements, as only three campaigns for Board seats (all international) went to a final vote. Q1 2019 saw a notable surge in long slate nominations, with 10 long slates nominated, accounting for 77 Board seats sought.

– Campaigns outside the U.S. continued to account for approximately 33% of global activity. In Europe, activists primarily focused on catalyzing change at their existing campaigns (e.g., Barclays, EDP, Hammerson, Pernod Ricard). ValueAct’s settlement for Board seats at Olympus and the defeat of Elliott’s proposals at Hyundai Motor Company and Hyundai Mobis indicate continued mixed results for U.S. activists in Asia. Heightened capital deployment in Canada (e.g., TransAlta, Methanex), accounting for 10% of the global total.

– John Jenkins