Boom time for boardroom raiders as activism hits record highs

Activist investors had their busiest quarter on record in the first three months of the year, emboldened by depressed share prices that have provided a fertile environment in which to find targets.

There were 83 new campaigns launched globally during the first quarter, according to data collected by Barclays, with Europe and Asia accounting for more than 50 per cent of activity collectively for the first time.

While there were several high-profile campaigns in the US, including an activist pile-on at software group Salesforce and a shortlived proxy battle at Disney initiated by Nelson Peltz’s Trian Fund Management, activity in the region declined by 30 per cent year on year.

Activists buy stakes in companies they think are undervalued and agitate for changes that will help increase the share price, typically through asset disposals or management changes.

Boardroom raiders, as they are commonly known, have come back in full force after a quiet period at the height of the pandemic when they were put off by the optics of targeting companies that were trying to navigate a global health crisis.

The most prolific activist during the first quarter was Align Partners, a small South Korean firm founded by former private equity executive Changhwan Lee. The activist, who launched eight campaigns in Korea during the first quarter, has made a name for himself in the so-called K-pop battle where he took on SM Entertainment.

Still, well-known activists such as Elliott Management, Icahn Group and Trian have continued to dominate with all of them threatening or embarking on proxy battles.

Carl Icahn is embroiled in a bitter fight with genome sequencing company Illumina over its $30bn acquisition of Grail despite objections from EU authorities. Illumina last month recommended shareholders withhold votes for the three directors nominated by Icahn at the company’s upcoming annual meeting, saying his involvement is a threat to the company’s long-term success.

Boardroom battles are set to play out in a different context now as market participants digest the Securities and Exchange Commission’s rollout of the so-called universal proxy card, which essentially gives shareholders an à la carte option for director nominees where they can vote for company-backed executives or those put forward by activists.

According to Barclays, universal proxy is in “wait-and-see mode.”