Issue link: https://digital.shearman.com/i/1162884
Shearman & Sterling LLP Shareholder Activism Trends in 2019 | 39 SHAREHOLDER ACTIVISM TRENDS IN 2019 George A. Casey, Scott D. Petepiece and Richard C. Fischetti INSIGHTS After a record-breaking year in 2018, shareholder activism slowed in the first quarter of 2019, returning to pre-2018 historic levels. Globally, Of those targeted in the first quarter of 2019: companies were targeted in public activist campaigns in the first quarter of 2019, representing a 20% decrease against the same period in 2018, which saw the highest quarterly activity on record. 295 207 2 companies were headquartered in North America (70%) in the Middle East and Africa (1%) 1 40 in Europe (14%) 25 in Australia (8%) 21 in Asia (7%) GLOBAL ACTIVITY LEVELS While activity levels in the United States decreased compared to the first quarter of 2018, activist activity in Europe continued to be robust in the first quarter of 2019, with activists focusing primarily on advancing their existing campaigns. 2 The United Kingdom had a particularly busy first quarter with 17 companies facing public activist demands, representing a 21% increase from the first quarter of 2018. 3 In Asia, where activism had been gaining traction in recent years, the number of companies targeted in the first quarter of 2019 fell by 38% compared to the record levels during the same period in 2018. 4 Globally, a total of 57 new activist campaigns were launched against 53 companies as of March 31, 2019, with $11.3 billion of capital deployed (down from $25.3 billion deployed in the first quarter of 2018 and in line with the mean quarterly deployment of $13.1 billion during 2016–2018). 5 Smaller targets continue to attract activist attention, as the cost of building a significant position from which to influence management and board decisions is lower in smaller-cap companies. For example, in the first quarter of 2019, 34% of all activist demands targeted companies with a market cap below $250 million, and 52% of all activist demands targeted companies with a market cap below $2 billion (compared to 34% and 56%, respectively, during the same period in 2018). Companies with a market cap above $10 billion accounted for 28% of all targets in the first quarter of 2019, similar to the corresponding quarter in 2018. 6 1 Shareholder Activism in Q1 2019, Activist Insight ("Activist Insight"). 2 Lazard's Shareholder Advisory Group, Review of Shareholder Activism - Q1 2019 ("Lazard Review"). 3 Activist Insight. 4 Id. 5 Lazard Review. 6 Activist Insight.