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Dec 19, 2023

Alphabet, Disney and HSBC rank as top activism targets in 2023

Thirteen large-cap companies named as key firms for activism attacks

Alphabet, Disney, HSBC and Unilever are among 13 companies identified this year as targets for activist shareholder campaigns.

Among the other firms named are Salesforce, which was targeted by four activists at once, and Richemont, which faced proposals from Bluebell Capital to appoint a director, increase its board size and amend its articles.

The list also includes Constellation Brands, FleetCor Technologies, Illumina, International Flavors & Fragrances, Magellan Midstream Partners, Texas Pacific Land, Twilio, Union Pacific Corporation and Ventas.

Large-cap companies targeted

The list comes from SquareWell Partners, which analyzed activist campaigns at the largest companies globally over the last three full calendar years as well as those initiated in the first half of 2023.

The research finds that 13 companies with market caps above $100 bn were targeted by activists between January 2022 and June 2023. This was more than in the two years prior, when only four companies of such a size were targeted.

HSBC was pushed by a shareholder group to split off the company’s Hong Kong-based business into a separate entity. The campaign, led by Ken Lui, submitted two shareholder proposals, the first calling for the break-up of the company and the other focused on restoring HSBC’s dividend to pre-pandemic levels, the research finds.

These proposals received only 20 percent support at the AGM and failed to attract any material support from HSBC’s institutional shareholders.

Bid for change

The technology, oil and gas sectors were those most favored for an activism attack this year, SquareWell finds. Salesforce was targeted by Elliott Management, Starboard Value, Third Point and ValueAct Capital, all at once, each of them calling for ‘margin strengthening, better market positioning’ and cash returns to shareholders.

In response to the bid for change, Salesforce appointed three new directors, including Mason Morfit of ValueAct, and subsequently laid off 10 percent of the workforce to reduce its real estate footprint.

Capital discipline

In the UK, one of the highest-profile and most controversial companies to be hit by activist campaigns this year was Shell, which has been consistently under fire for its lapsing ESG goals and backsliding on its commitment to reduce oil production by 1 percent-2 percent each year.

The company, which made record high profits this year, was previously pushed in 2021 by Third Point to consider splitting into two entities, one focused on a traditional oil business and the other on renewables.

In August 2023, however, Third Point proclaimed that the board had ‘demonstrated unwavering commitment to shareholder value, capital discipline and improved returns’ even though ‘Shell has so far insisted on maintaining its conglomerate structure’.

In Europe, SquareWell finds an increase in activist campaigns at large German companies. Increasing from two campaigns in 2020 and 2021 combined, activism in this region grew to seven campaigns in the 18 months to June 2023, with companies like Bayer, Brenntag and RWE at the top of the list.

Pharmaceuticals company Bayer came under pressure from several investors, including Alatus Capital, Bluebell Capital Partners, Deka Investments, Inclusive Capital Partners and Temasek Holdings. The pressure led to a restructuring of the C-suite and the announcement of a new CEO in February 2023.