Activist Investors Targeting European Firms Following Record Campaign Year

Activist investors are gearing up for a dynamic year in Europe, setting their sights on companies across the continent after a year marked by a record number of campaigns. Experts predict that activist campaigns are slated to become even more vigorous and confrontational as they seek to induce significant changes in corporate Europe.

The Changing European Landscape

Historically, European companies have been insulated from the pressures of activist investors due to strong alliances with local unions, governments, and large investors. Such ties facilitated private negotiations to resolve disputes, keeping public clashes to a minimum. However, this traditional landscape is undergoing a significant shift, with growing investor activism poised to disrupt the status quo and possibly lead to more strategic showdowns.

Increasing Pressure for Change

Some major investors, including the likes of Deka Investment, are now joining forces with well-known activist entities such as Elliott Investment Management, openly demanding sweeping changes. These traditional investors are becoming more forceful, mirroring actions previously associated with activist investors. The landscape is ripe for upheaval, with outdated alliances in Europe being tested and investor attitudes towards activism changing.

Record-Breaking Activism in Europe

A considerable increase in activism was noted last year, with Lazard's data showing a 15% rise in new campaigns compared to the prior year. This growth reflects a strategic pivot towards Europe by funds, particularly those specializing in mid-cap companies. Furthermore, traditional institutional investors are employing typical activist tactics such as advocating for strategic reviews and suggesting potential board members.

While Britain continues to be a prime target, Germany has seen a notable uptick in activist campaigns. Some high-profile European campaigns include Bluebell Capital Partners' and Inclusive Capital Partners' involvement with Bayer AG and PrimeStone Capital, and Engine Capital's disputes with Brenntag. On the other hand, France experienced a decline in activist pursuits.

Anticipations for the Following Year

With a challenging economic landscape, companies are struggling to navigate uncertainties and market volatility. Activists are keenly aware of these challenges and are waiting to capitalize on any potential weaknesses. Newcomers among the activist ranks are expected to emerge, especially within the industrial and healthcare sectors in Europe.

Notably, participation by long-only investors and high-profile individuals in these campaigns has seen a rise, indicating a broadening base for activist involvement. Even though the base for such activism remains primarily in the United States, Europe presents myriad opportunities that activists are eager to explore.

activism, Europe, investors