Activist investors are set to intensify their efforts in influencing and restructuring European companies in the upcoming year, following a record number of campaigns in 2023. Traditionally considered a backwater for activists due to strong ties between management, unions, and local governments, Europe is witnessing a shift as a growing number of investors, including traditional ones like Deka Investment, openly support major changes in companies. The increasing willingness of active portfolio managers to apply pressure is expected to lead to more visible and impactful campaigns for corporate change in the region.
1. Historical Landscape:
Europe, known for its historically closed-door negotiations and alliances, has seen a surge in activist campaigns challenging the status quo. The close ties between management, unions, and investors often acted as a shield, but this traditional protection is weakening as activism gains momentum.
2. Changing Dynamics:
Investors, including traditional ones, are becoming more willing to demand drastic changes in European companies. The shift signifies a departure from the past, where investors in Europe were hesitant to call for significant transformations.
3. Dissipation of Stigma:
The stigma associated with U.S.-style activism, characterized by bold investment plans and shock-and-awe tactics, is dissipating. This change in perception allows activists to pursue their goals more openly, pushing for strategic changes without being hindered by previous reservations.
4. Anticipated Increase in Activism:
A survey by law firm Skadden Arps reveals that 60% of polled companies expect shareholder activism in Europe to rise in the coming year. The dissipation of stigma and the changing landscape are creating an environment conducive to more aggressive activism.
5. Record Campaigns in 2023:
Lazard’s data indicates a record 69 new campaigns launched at European targets in 2023, representing a 15% increase from the previous year. This surge underscores the growing trend of investors seeking to influence and reshape European companies.
6. Shift in Geographical Focus:
While the United Kingdom remains the most targeted region, German companies witnessed a substantial increase, comprising 20% of all European campaigns in 2023, up from 8% in 2022. Other regions, such as Italy, experienced increased activity, while France saw a decline in campaigns.
7. Aggressive Targets and Sectors:
Prominent activist campaigns in 2023 targeted major companies like Bayer AG and Brenntag. The pharmaceutical and biotech sectors saw increased attention, reflecting activists’ readiness to engage with management teams facing economic uncertainties.
8. First-Time Activists and Changing Participants:
The landscape is evolving with first-time activists expected to play a more significant role in pushing for changes. Long-only investors were involved in 14% of campaigns in 2023, up from 12% in previous years, while individuals, founders
and family offices accounted for 16%, compared to 11% between 2018 and 2022.
9. Global Comparison:
While Europe has seen a rise in activist campaigns, the U.S. remains the dominant market for activist investors, with 133 campaigns in 2023
compared to Europe’s 69 and the Asia Pacific region’s 44.
10. Future Outlook:
The evolving landscape suggests that activists will continue to seek opportunities in Europe, particularly in sectors facing economic challenges. The unpredictability of the economic environment and market headwinds provide fertile ground for activists looking to instigate change.
Conclusion:
As activist investors set their sights on corporate Europe after a record year
the dynamics of shareholder activism are undergoing a transformative shift. The increasing openness of investors, coupled with changing perceptions and a surge in campaigns, indicates a new era for corporate restructuring in the region. The coming year is poised to witness more assertive activism, challenging the traditional norms that have defined European corporate landscapes.