Yahoo Finance Activist Investor Campaigns Hit Record High, Driven by Japan
(Bloomberg) -- New campaigns by shareholder activists reached record levels globally in the first six months of the year, data from Lazard Inc. show.
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The number of new activists campaigns totaled 147, up 7% from 138 in the same period in 2023 and 29% above the five-year average, Lazard said in a report.
The pickup in activity was largely concentrated in the Asia-Pacific region, while North America and Europe were near last year’s pace. New campaigns in APAC jumped 65% — to 43 from 25 — with Japan accounting for 28 of those.
Recent campaigns include Elliott Investment Management building sizable stakes in Sumitomo Corp. and SoftBank Group Corp., and Oasis Capital last week calling for a governance overhaul at Japanese drugstore chain Ain Holdings Inc.
“Increased Japan activity suggests governance reforms in the country have been effective, increasing the market’s attractiveness for both international and local activists,” Barclays Plc said in its parallel review of the first half that reached similar conclusions.
Tech, Real Estate
In the US, 62 campaigns were launched, an increase from 56 last year, according to Lazard. Technology companies were frequent targets, representing 26% of the campaigns. Hardware and software companies including Dye & Durham Ltd., Match Group Inc., Pitney Bowes Inc. and Twilio Inc. were targeted simultaneously by two activists.
Real estate emerged as another area of heightened activism, reflecting an “unusually active” period for sector specialist Land & Buildings Investment Management, which has launched five campaigns this year. Activism in the financial services sector was muted, with no new campaigns.
Read Also: Elliott’s Sumitomo Stake Reflects Growing Activism in Japan
The “swarming” phenomenon, in which two or more activists pursue the same target, has become a consistent feature of campaigns in Europe, Lazard said.
“Swarming in Europe appears related to the rise of first-time activists and activity from long-only institutions,” Lazard said in its report. “These types of investors may be more inclined to partner with other activists to pool their influence.”
Globally, the first-timers, which can range from generalists exploring activist tactics to new funds spun off from established platforms, represented 46% of activists waging campaigns and 34% of the new campaigns.
Settling, Not Fighting
Lazard’s data suggest that activists and their targets are increasingly opting for private negotiations to avoid proxy battles, a trend the bank tied to the “threat” of the universal proxy card. Starting in 2022, the US Securities and Exchange Commission began imposing requirements for UPCs, which place a company’s nominees and those put forth by activists on the same ballot, allowing shareholders to pick and choose from competing slates.
Lazard found that 39% of seats won in a settlement were announced within a week of a public campaign starting, up from the 26% five-year average before the UPC was introduced. Only 32% of boards at targeted companies wound up in fights lasting longer than 90 days, below the historical average of 44%.
In a third report on activist investors, Freshfields determined that 39 of 42 board seats won by activists this year — as of June 14 — came via settlements rather than shareholder votes.
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