TheCorporateCounsel.net

FEI’s Q4 “Activism Vulnerability Report” highlights recent activism trends and notable activist campaigns.  Here are some of the key takeaways:

– Activist investor activity experienced a seasonal dip after a very active first half of 2024. This trend aligns with typical patterns. There were 56 campaigns initiated in 3Q24, closely mirroring previous years’ activity levels for the same period.

– Board seats gained by activists in U.S. companies through September 30, 2024, remained relatively steady compared to the same period in 2023. However, the pathways to these seats shifted, with fewer board seats achieved through settlements and a slight uptick in board seats won through proxy contests.

– Activists publicly sought one or more board seats 147 times during the first three quarters of 2024, up from 112 at the same point last year. However, their success rate declined, with only 53% of these demands resulting in board seats, down from 63% in the same period last year.

– Mid-cap companies, in particular, have seen a surge in activist interest, accounting for 25% of total campaigns in 3Q24, compared to just 10% a year earlier. This shift is not without reason: year-to-date through November 1, activists are achieving higher success rates in the mid-cap segment, with an impressive 74% of concluded mid-cap campaigns delivering favorable outcomes for activists in 2024, up from 51% during the same period last year.

– Through 3Q24, there have been 40 campaigns with explicit demands for M&A transactions, compared to 34 during the same period last year. This persistent and increased focus on M&A may reflect activists’ interest in capitalizing on improving conditions in the current economic environment, particularly as interest rates have begun to decline and future rate paths become more predictable.

The report says that the most frequently targeted sectors during the third quarter were TMT, with 14 campaigns, followed by Financial Institutions, with eight, and that these same sectors are continuing to face activist pressure in the current quarter, with nine new campaigns in TMT and six in Financial Institutions launched between October 1 and November 1, 2024.

– John Jenkins