Shareholder activism set to increase in Europe

ShareholdersShareholder activism, which mainly centres on the US, is increasing in Europe where listed companies sit on €2.1 trillion in cash, a law firm says.

Linklaters, one of largest law firms in the UK, says the UK is the primary focus for activists in Europe, but France, Austria, Switzerland and Ireland all have seen multiple activist actions this year.

There has been a 126% increase in actions by shareholder activists since 2010, the law firm says.

These include the campaign against Alliance Trust, a UK investment trust, which appointed two new board members after pressure from Elliot Advisors this year.

Large and mid-cap companies are most likely to be targeted, Linklaters says. Whereas in 2011, the main targets were financial firms (49%) and services (27%), a more diverse range of companies across Europe will be the focus of action. For example, tech firms (13%), commodities firms (19%), services (23%) and financials (30%), Linklaters predicts.

Pressure to appoint directors, as in the case of Alliance Trust, continues to be the most popular tactic among activists, accounting for 50% of all campaigns in the UK this year.

“US activists are clearly adjusting their strategies to look toward Europe. Some of this focus can be attributed to a perceived undervaluation of companies that can then be used as a cheap entry point,” says Charlie Jacobs, a partner in mergers and acquisitions at Linklaters.

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