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Nov 09, 2015

US activist investors increasingly target Europe

Activist actions increase 126 percent in five years in Europe, Linklaters says

US activist investors are increasingly targeting European companies because they perceive share prices to be low and local shareholders are demanding greater performance amid recovery from the euro crisis, according to a study by international law firm Linklaters.

The number of actions by activist shareholders per year in Europe has jumped 126 percent since 2010. The main focus is on UK companies, but interest in companies from France, Austria, Switzerland and Ireland is also growing rapidly, Linklaters says in a press release announcing the study.

‘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, M&A partner at Linklaters. ‘Equally, with noise of a euro crisis slowing and M&A taking off, activists are exploiting those shareholders that are becoming less tolerant to underperformance.’

The UK has seen 32 actions by activist investors so far this year, followed by France with 13, Austria with 11, Switzerland with nine and Ireland with seven. Almost half (47 percent) of the actions in the UK in the third quarter aimed to gain board representation while 16 percent focused on removing a CEO or director.

Interest in Europe has also broadened out from just the financial sector, which drew 49 percent of all activist actions in 2011, and the services sector, which saw 27 percent. So far this year, 30 percent of all actions have been in the financial sector, 23 percent in services, 19 percent in commodities, 13 percent in technology and 3 percent in healthcare.

Globally, a total of 86 activist actions have been launched this year, representing an increase of 17 percent since the study conducted in 2011, Linklaters says. At the same time, the number of publicly active activist investors has surged to 314 from 119.