October 27, 2021

Activism: Third Quarter Highlights

This Lazard report summarizes shareholder activism during the third quarter of 2020. Here are some of the highlights:

– 123 new campaigns have been initiated globally in 2021 YTD, in line with 2020 levels, but below historical averages. Year-over-year stability primarily driven by a strong start to the year, with Q3 new campaigns launched (29) and capital deployed ($8.5bn) below multi-year averages

– U.S. share of YTD global activity (54% of all campaigns) remains elevated relative to 2020 levels (45% of all campaigns) and in-line with historical levels.  The 66 U.S. campaigns initiated in 2021 YTD represent a 27% increase over the prior-year period.

– After a slow start to the year, Elliott remains the most prolific activist in terms of launched campaigns (12), with six new global campaigns reported in Q3, including Citrix, Toshiba  and SSE.

– 73 Board seats have been won by activists in 2021 YTD, below historical average levels. While H1 Board seat activity was stable relative to prior years, only two new Board seats were won in Q3, an unusually low level.

– 45% of all activist campaigns in 2021 YTD have featured an M&A-related thesis, above the multi-year average of 39%. Scuttling or sweetening an announced transaction remained the most prominent M&A demand, accounting for 53% of such campaigns YTD.

The report also says that, despite increasing regulatory scrutiny of investor statements about how ESG considerations are integrated into their investment strategy, money continued to pour into ESG funds during Q3. If you find the prospect of those ESG investors listening to the siren song of activist hedge funds unsettling, check out this CFO Dive article, which has some tips for companies worried about the rising tide of ESG-based activism.

Lazard’s report notes that Q3 closed with a bang, with more than 15 new campaigns launched between 9/27 and 10/8. That suggests that 2021’s final quarter may be a busy one.

John Jenkins