Actionable Ideas for Companies and Sponsors

Shareholder Activism on the Rise in Europe

In Europe, many shareholder activists have stepped back amid the pandemic and the uncertainty of the Russia-Ukraine war. According to Activist Insight data, the number of activist campaigns against European companies fell in CY2021 and continued to decline in Q1 2022.

However, when activists do engage, they are increasingly winning. Their success rate – defined by campaigns where an activist achieves at least some of its publicly stated demands – has risen two years running after hitting an all-time low in 2020. This activism is increasingly focused on Board, M&A and ESG-related demands, with balance sheet and operational activism continuing a year’s-long decline.

Activists’ ESG focus is particularly notable in Europe, and the recent creation of Clearway Capital in Germany is yet another sign that climate and social issues will continue to be central to many activist campaigns.

The U.K. market, with its shareholder-friendly regime and target-rich market of companies with depressed valuations, is getting increased attention from U.S. investors. In this past quarter:

• Trian’s Nelson Peltz joined the Board of Unilever only months after his fund revealed a mere 1.5% stake in the company.
• ESG-focused activist fund Inclusive Capital Partners commenced an unsolicited offer via a bear hug letter for homebuilder Countryside Partnerships, where it holds a 9.2% stake, resulting in the company announcing a formal sale process just two weeks later. This comes on the heels of one of Countryside’s biggest shareholders, Browning West, urging the board to consider a sale.

We think Europe will continue to be an attractive market for value-oriented investors, especially with oversaturation in the U.S. market and the ample dry powder available to activist funds.