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Review of Shareholder Activism 1Q18

Key Observations on the Activist Environment in 1Q 2018

  • Activist activity reached new heights in 1Q18 both in terms of capital deployed and campaigns initiated
    • $25Bn of capital was deployed in new campaigns in 1Q18 – the most in any quarter on record
    • 73 new campaigns were initiated in 1Q18 – the highest quarterly activity on record
    • 65 Board seats were won in 1Q18 – well ahead of 2016 YTD and 2017 YTD – while an additional 78 seats are “in play”
  • Activism in Europe continued to be robust in 1Q18, accounting for ~29% of capital deployed and ~23% of campaigns initiated
    • The $7.2Bn of capital deployed in new campaigns against European targets was ahead of the prior year period, suggesting the possibility that 2018 may surpass the 2017 record
    • Elliott remained the most active global player, and the UK was by far the most targeted country
  • Influence of passive investors continued to strengthen as Vanguard, BlackRock, and State Street now own ~18% of the S&P 500 vs. ~14% in 2012
    • Increasing importance has driven these firms to materially expand their ESG efforts, with BlackRock pledging to double its stewardship team’s headcount and Vanguard establishing a European stewardship presence
    • ESG issues have attracted significant attention by passive investors, who are pushing companies to serve a broader social purpose in their communities
  • M&A continued to be a core focus, with activists pushing for sales processes, intervening in announced transactions and forcing break-ups and divestitures
    • Interplay between activists and M&A is having global implications, with examples including Darwin Deason and Carl Icahn calling on Fuji and Xerox to terminate their JV and Sachem Head pushing UK-based Whitbread to separate its Costa Coffee business

Lazard’s Shareholder Advisory Group – Review of Shareholder Activism 1Q 2018, April 2018

Image Source: Activist Insight, FactSet, Public Filings

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