"European media have not entirely bought into the nice guy activist thesis"
[ An excerpt by Amelia Pan taken from 'Activist Investing in Europe 2018' by Activist Insight - download the full report here. ]
There was a time when European companies didn’t worry much about activist investors. They thought long history, high status and protective local regulations would protect them. That changed with AkzoNobel, Rolls-Royce, Nestlé, Danone and Shire, which demonstrated how U.S. activism could work here. Now “homegrown” activists such as Cevian, CIAM, and The Children’s Investment Fund (“TCI”) have launched big campaigns of their own to unlock shareholder value across Europe.
Two important trends guarantee there will be more. First, capital flows have gone global and company share registers are now dominated by funds like BlackRock, Vanguard, and Fidelity. Their U.S. heritage and experience make them more likely to support activist campaigns. Second, the reputation of activists has changed: some corporate raiders are getting support from the public and other shareholders.
Talk to them
European companies can learn from their American peers, not least how communications can shape the outcome of an activist campaign. It’s no longer enough to react with defensive crisis communications. Engaging with the activist quickly, respectfully and constructively is an opportunity to avoid major disruption and preserve management control.
Those who choose to ignore an activist’s proposal may be surprised by the support the activist receives from other large shareholders. When Brunswick surveyed global fund managers, 75% of those who responded felt activism was a force for good.