Boards Warned Against Rushing to Settle with ActivistsBoards should consider the pros and cons of reaching a settlement with activists as campaigns once again make headlines after the Covid-19 pandemic. 09 June 2022
Jessica Tasman-Jones of Financial Times’s specialist publication, Agenda, penned an article on activism in the UK. Public activism at UK companies rose by 92% in the 12 months to August 2021, according to an analysis by SquareWell Partners. That figure is expected to remain high because of low stock prices caused by Brexit and the pandemic. The Ukraine war could lead to greater activism because market volatility “tends to expose companies that are more vulnerable”, says Andrew Brady, a senior analyst at SquareWell.
In the US, boards are settling with activists more quickly. By the third quarter of 2021, 32% of companies had settled less than a month after the activist announced the campaign, up from 19% of settlements in 2020 and 13% in 2019, according to law firm Sullivan & Cromwell.
Settlements are becoming more common in the UK, says Suren Gomtsian, associate professor in the school of law at the University of Leeds.
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Activist investors are expected to launch more and bolder campaigns for change among European companies in the year ahead, advisers told Reuters, after a record number in 2023.
AQTION, a subsidiary of SquareWell Partners, published its inaugural study – ‘Stewardship in AQTION’ – which details how the world’s largest 65 asset managers and owners steward their portfolio companies and how they incorporate extra-financial considerations into their investment decision-making processes.
Carl Icahn is preparing for a second board battle at gene-sequencing company Illumina after shareholders elected his candidate, Andrew Teno, to the company’s board and ousted the chairman, John Thompson, in May. Icahn then successfully pushed out former CEO Frances DeSouza in June.