US activist investors targeting UK firms hits three-year high — data

Mon, 06th Jan 2025 12:12

(Alliance News) - More UK companies were targeted by activist investors in 2024 than any other European country, with US funds launching 40% of all campaigns, new data reveals.

US-based intervention in UK companies reached a three-year high, according to the latest Activist Alert report by Alvarez & Marsal, A&M.

Activist investors tend to buy shares in companies they view as underperforming, and can make public demands about how the business should be run.

There were 59 public activist campaigns targeting UK companies last year, as investment funds sought to influence change and boost returns to shareholders.

For example, activist investor Cevian took a 5% shareholding in knee and hip replacement maker Smith & Nephew PLC, arguing that the company had "not generated shareholder value for many years".

The Swedish investment group is renowned for taking stakes in firms and pressing for change.

Meanwhile, activist investor Gatemore called for Watches of Switzerland Group PLC to ditch its main stock market listing in London in favour of New York.

Similarly, London-listed miner Rio Tinto PLC faced demands to scrap its primary listing and instead focus on Australia, adding to pressure on the City's stock markets.

Other UK businesses to be targeted by activist investors in 2024 included consumer goods group Reckitt Benckiser Group PLC and bootmaker Dr Martens PLC.

Some 40% of all campaigns against UK corporates in 2024 were launched by US-based funds, totalling 23 – the highest number for three years, A&M said.

Andre Medeiros, a managing director at A&M, said: "With domestic market valuations reaching new heights, US activists are increasingly turning to Europe, and particularly the UK, to find value.

"Corporates here continue to underperform against their global peers in delivering gross margins, cash generation and return on capital, which is demonstrated in the significant discounts seen on UK equities."

Separate research from Goldman Sachs projected a 20% increase in merger and acquisition activity around the world this year, amid expectations that a new Trump administration in the US could drive a more active deals market.

A&M estimated that 49 UK corporates could be vulnerable to public shareholder activism over the next 18 months.

Nevertheless, the report identified a growing emphasis on activist funds having private discussions with company boards, keeping their demands out of the spotlight.

Governance changes remained a top demand from investors, but there was a lower emphasis on environmental and social demands last year.

While there were growing calls for operational and strategic changes to boost financial positions.

By Anna Wise, PA Business Reporter

Press Association: Finance

source: PA