Activist Investors Are Targeting Bigger Companies, Report Shows

  • Europe is an increasing focus for such actions, led by UK
  • Activist situations are on track for a record in 2015

Activist investors are becoming more active than ever and are increasingly targeting larger companies, according to law firm Linklaters LLP.

The average market capitalization of target companies has risen to $9 billion, seven times larger than it was in 2010, according to the study released on Wednesday. There were 860 shareholder activist situations in the first nine months of this year, compared with 907 in all of 2014.

Europe is an increasing focus, with the euro’s depreciation against the dollar and a decline in share prices making companies more attractive to U.S. investors, said Charlie Jacobs, mergers and acquisitions partner at Linklaters. "Equally, with noise of a euro crisis slowing down and M&A taking off, activists are exploiting those shareholders that are becoming less tolerant to underperformance."

The U.K. saw 32 activist situations this year, attracting the most interest from investors looking at Europe, according to the study. Companies in France, Austria, Switzerland and Ireland have also seen increasing activity. Seeking boardroom representation remains the most popular tactic among activists, accounting for 50 percent of all campaigns in the U.K. this year.

Activist Shadow

Rolls-Royce Holdings Plc, the U.K. engine maker, said in July that activist hedge fund ValueAct Capital Management became its biggest investor. The U.S. investor also bought a stake in British engineering company Smiths Group Plc, people with knowledge of the matter said in August.

"The shadow of an activist can remain for a long time with a listed company and make it difficult to do business as well as for deal making," Jacobs said, pointing to the campaign that Sherborne Investors, led by Edward Bramson, is leading against Electra Private Equity Plc. Electra has called a general meeting on Thursday for shareholders to vote on resolutions proposed by Sherborne Investors, including Bramson’s appointment to the board.

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