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September 18, 2017

September 2017 

Click on the full report link to view the findings: A&M Activist Alert

 

Shareholder activism directed at European companies is a growing and evolving reality for the Boards of quoted corporates. When such activism turns into a public campaign by one or more investors, there can be very significant financial and reputational risks for the targeted corporate and its Board.

A&M has developed the “A&M Activist Alert”, or “AAA”, to predict which corporates will be the next to be targeted. The AAA is based on the most comprehensive statistical analysis of its kind and has predicted 58% of European activist targets since January 2015. The underlying analytical model encompasses a wide range of variables and is primarily based on a detailed analysis of over 1,500 listed companies in the UK, Germany, France, Switzerland, Scandinavia, Benelux and Italy.

The model will be refreshed on a quarterly basis to assess the changed dynamics across key variables, timescales, country and industry, and to update the list of predicted targets. We do not publicise the AAA scores for individual corporates, or those that feature on our Red and Amber warning lists. However, if any corporate is interested in discussing their own AAA score and wishes to explore how their board can optimise their performance to avoid becoming a target, please do contact us.

Key findings from the A&M Activist Alert

  • On average, U.K corporates are 32 percent more likely to be targeted than those from the other six nations/regions analysed in the AAA. Benelux corporates are 25 percent more likely to be targeted.
  • German companies stand out from the alternate perspective in that they make up 16.1 percent of the sample but 10.8 percent of the predicted targets.
  • Boards are being granted less time to address underperformance. The average time between first evidence of underperformance and activism has reduced from 2 years in 2016 to 1.9 years in 2017.
  • Consumer and Industrials companies make up the largest number of entries of corporates at risk.
  • European activists are on the march, with European funds accounting for approximately 26 per cent of global activist or event-driven funds.
  • Of all public activist campaigns in Europe from 1 January 2015 to date, 69 percent included a demand for changes on the Board.
  • There are early indications that increasing the number of women on a Board may be associated with a reduced risk of shareholder activism.

Market disruption drives activist interest as it tends to increase performance gaps between corporates in a sector and enables activists to identify corporates that were high performers but have fallen back.

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