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    INVESTMENT BANKING | INNOVATION EDGE

    Activists secure more board seats and demand M&A

    12 Feb 2024

    Shareholder activists blitzed corporate boardrooms and pushed for record M&A demands in 2023. Our Investment Banking Shareholder Advisory Group’s 2023 Review of Shareholder Activism tracked the busiest two years on record for activist campaign activity. Read about the five prevailing trends from 2023, and what our experts think will impact clients in the year ahead.

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    Top shareholder activism trends through Q3

    To receive a copy of the full report, 2023 Review of Shareholder Activism, please email: ShareholderAdvisoryGlobal@barclays.com

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    1. Shareholder activism thrives globally

    Despite global geopolitical instability, economic uncertainty and stagnant markets for mergers and acquisitions, activists showed their resilience, proving they can push for corporate change and shareholder value in any market cycle.

    Activists were particularly busy in Q4 with a total of 71 new campaigns, a Q4 record, for a total of 229 new campaigns in all of 2023. The surge in Q4 came as director nominations began to open for the upcoming proxy season.

    Three sectors were the target of more than half of all campaigns: Industrials, 21%; Technology, 20%; and Healthcare, 15%.

    Record pace for shareholder activism

    2. UK, Canada and Germany see a surge in campaign activity

    Canada saw a 171% year-over-year increase in shareholder activism with 19 campaigns, a record high.

    In the UK, activity jumped 71% to 29 campaigns, also an all-time high. Germany saw 11 campaigns, which marked a 120% increase over the previous year.

    Campaigns in the US fell 20% to 109 in 2023. Still, that number is in line with the four-year average of 110 campaigns per year, as the US continues to be the primary driver of global activism. Activity in the US accounted for 48% of all global activism, down from 58% in 2022. 

    M&A objectives

    3. Leading US activists have been involved in global activity

    Despite less activist activity in the US, US-based activists were responsible for a significant portion of global campaign activity. 2023’s three busiest activists, all US-based, launched 14% of all global campaigns in 2023. 

    A total of 136 activists launched campaigns in 2023, and for most it wasn’t their first foray. Only 31 were first-timers, and a significant portion were firms with long track records of activist tactics.

    Activists continue forcing Board changes

    4. A record number of campaigns demanded deals

    The demand for M&A was the top driver for activists, with a record 49% of all campaigns in 2023 having some sort of M&A demand. Likely driving the surge is a desire to invigorate a sluggish M&A market, weighed down by higher interest rates and inflation.

    Pushing companies to consider their portfolio through breakup and divestiture demands were the most common objectives in 2023, accounting for 42% of all M&A demands.

    Demanding an outright sale was the second-most common goal, making up 34% of all M&A demands.

    M&A drives nearly half of all activist campaigns

    5. Universal Proxy is reshaping boardrooms

    Activists appear to have more leverage to win board seats thanks to the Universal Proxy Card (UPC), adopted for contested elections in the US.

    Activists won 134 board seats in 2023, an increase of 30% over the previous year and the highest total since 2018.

    Activists also won 36 seats in final votes at annual general meetings in 2023, a 125% increase over the previous year and an all-time high. Activists won seats in 80% of elections, compared to 33% in 2022, another potential indicator of the impact of UPC. 

    What to expect in 2024

    What to expect in 2024

    A stable interest-rate environment could reignite the M&A market, creating more opportunities for activists to capitalize on their M&A demands.  Already, nearly half of all activist campaigns in 2023 included an M&A objective.

    Sponsors are sitting on more than $2 trillion to possibly deploy on acquisitions. If sponsors ramp up activity in 2024, more activists will demand that companies review their business portfolios for disposal opportunities or possibly to take their entire company private.

    Europe could continue to see a rise in shareholder activism, particularly in the UK, Germany and France. These markets provide activists with a ripe opportunity for campaigns due to lower valuations, conglomerate business portfolios, and increased pressure from shareholders to maximize returns.

    On the regulatory front, companies and investors are still waiting for definitive guidance on climate-disclosure rules, which the SEC is expected to publish sometime this year.

    Important content disclosures

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