Activism and M&A Solutions 2018 Year in Review
In 2018, activists deployed record amounts of capital in campaigns against some of the largest and most prominent companies globally.
Elliott, for example, deployed over $2B at BHP and over $1B at each of ten other companies. Trian concentrated its fund and doubled down on P&G with an investment of almost $3.5B. These established activists are not alone in making massive investments, which proved to be successful as many were rewarded with board seats, in most cases, through settlements. According to Activist Insight, there were 142 settlements as compared to 119 in 2017. In some cases, management teams and incumbent boards agreed to meaningful reimbursement checks to cover some costs of the activists. Of the settlement agreements publicly disclosed, US companies disbursed an average over $400K1.
A result of the ballooning in shareholder activism campaigns over the past few years is that shareholders of all sizes and agendas have become emboldened to publicly air their grievances via shareholder proposals. This method of activism is typically less invasive than those that require changes in management, boards or divestitures, but is indicative of the lengths some shareholders are willing to go to make a point.
Shareholder proposals for environmental and social concerns made up half of all shareholder proposals in the 2018 proxy season, according to ISS. Accordingly, boards of directors are taking notice and engaging on this issue in greater and more meaningful ways.
1. Activist Insight Online, IN-DEPTH: Giving Back, January 8th, 2019