US activist investors ramp up attacks on UK companies
US activist investors ramped up their attacks on UK companies in 2024, with British firms continuing as the top target for investor campaigns in Europe.
42 per cent of all activist campaigns in Europe targeted the UK, with 59 companies coming under pressure throughout the year, according to Alvarez & Marsal’s latest Activist Alert Outlook.
The report revealed that shareholder pressure on British companies is increasingly coming from the US, with 40 per cent of campaigns against UK companies being launched by American funds.
This is the highest proportion for activist campaigns from the US in five years, and compared to 35 per cent of campaigns launched by Americans across all of Europe.
“With domestic market valuations reaching new heights, US activists are increasingly turning to Europe, and particularly the UK, to find value,” said André Medeiros, managing director and co-head of consumer and retail, EMEA, at A&M.
“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.
“While the much-anticipated return of the M&A market failed to fully materialise this year, there are growing expectations that 2025 will herald further opportunities to unlock value and attract activists.”
Among the 23 campaigns launched by US funds against British companies this year, A&M noted that activist funds have been steadily reducing their use of openly public campaigns, instead favouring greater discussion with company board privately instead.
While governance changes continue to be the top target for activist investors, there has been a rise in calls for operational and strategic changes to boost bottom-line delivery, while environmental and social demands have declined.
Looking to 2025, and A&M analysts predicted that as valuations remain low, activist campaigns focusing on boosting share price will continue to increase.
“After several years of low deal volumes, there is also a growing expectation of a more buoyant deal market in 2025, which is a known catalyst for shareholder activism,” the report noted.
In total, 141 firms across Europe are predicted to be at risk of activist investors next year, 49 of which are based in the UK.