Switzerland among the top three target markets in Europe for activists

Media release    

Switzerland among the top three target markets in Europe for activists

Switzerland sees significant increase in activist campaigns compared to 2023

Activist threat drives earnings surge in targeted sectors

Smaller activists take the spotlight as large activists engage behind the scenes

Nearly 150 European companies at risk of activism over the next 18 months – 14 in Switzerland

Zurich, 10 June 2024 – Global professional services firm Alvarez & Marsal (“A&M”) has released the findings of its latest analysis of shareholder activism in Europe for the remainder of 2024 and into 2025, the “A&M Activist Alert”, or “AAA”.

The report includes new analysis, which shows that the most proactive corporates are rising to the challenge when a peer is targeted by activists. The more similar the peers are to the targeted corporate, the more likely they are to improve their operational and financial performance in the face of the activist threat.

When comparing the top quartile of these peers with the top quartile of the broader sector, they demonstrated outperformance averaging 9.1% greater Earnings per Share, 0.8% greater Gross Margin and 1.3% greater Return on Capital. Across the 440 corporates in that top quartile, this led to an estimated increase in shareholder value in excess of US$ 235bn over the analysed period.

Malcolm McKenzie, Managing Director and Chair of European Corporate Transformation Services said: “The essential objective of an activist is to persuade corporates to make changes that deliver greater shareholder value without paying a premium for control. Larger activists have a profile and track record that increasingly allows them to avoid the distraction of a public campaign. Being constructive and recognising that no-one has a monopoly on good ideas can mean everybody wins.”

Switzerland sees increase in activist campaigns

So far in 2024,[1] there have been 88 campaigns across Europe, down 16% on the prior year. The lower levels of activist campaigning also contributed to a 30% reduction in the number of shareholder resolutions proposed in European AGMs.

The U.K. continues to be the most targeted market in Europe with 25 campaigns, down from 27 in the first 5 months of 2023. Germany continues to be a busy activist market, with 21 campaigns so far this year. Switzerland has seen a marked increase in activist campaigns, accounting for 16% of campaigns versus 9% last year. Since the beginning of the year, Switzerland has seen a total of 14 campaigns by activists. Swiss corporates targeted included Glencore plc and Chubb Limited. Such increases in Swiss activism were as we predicted given the more shareholder friendly corporate law reforms that came into effect in January 2023.

The Industrials and Consumer sectors remain in the spotlight, with a particular focus on auto manufacturers and packaged/personal products. These sectors saw 14 and 17 campaigns respectively. Materials companies have also seen a marked rise in activist interest, accounting for 14.5% of campaigns in 2024 compared to 5.9% in 2023.

Campaigns by smaller activists on the rise

So far in 2024, smaller activists have been the most vocal. Activist funds with AUM of more than $10bn launched just 10.5% of campaigns, compared to 28% three years ago. Conversely, those with AUM of below $2bn account for 74% of campaigns so far this year, compared to 61.5% in 2023. It is clear from our market discussions that larger funds are increasingly opting for more private approaches and constructive engagement that avoids the need for public campaigns.

Environmental and Social goals have continued to be an important focus for corporates and their stakeholders. There have been 19 campaigns so far this year, compared to 26 in the first 5 months of 2023. We anticipate that a focus on nearer term investment yield will attract greater support and continue to soften the ESG momentum.

Alessandro Farsaci, Head of the Swiss Restructuring and Turnaround Practice said: “With the increased focus on Swiss corporates, management and supervisory boards in those countries should be prepared to be challenged. With open minds and a recognition by all parties that no-one has a monopoly on good ideas, it is increasingly the case that active shareholders need not become activist.”

Outlook for H2 2024 & 2025

The refreshed A&M Activist Alert predicts that there are 148 corporates at risk of public shareholder activism in the next 18 months. As dealmaking picks up, the options and opportunities to drive increased shareholder value will increase. We will see more activist demands relating to proposed M&A (for, against and/or bumpitrage). There will be a greater focus on public-to-private deals, which will attract activist interest. The U.K. remains in the spotlight, with 57 corporates at risk, followed by Germany with 31 and Switzerland with 14.

The consumer, energy and materials sectors are predicted to experience increased targeting by activists, with the anticipated return of the M&A market being one of the key drivers. 37 consumer companies are at risk, with a particular focus expected to be on apparel and consumer staples. The industrials sector will continue to be the most targeted sector, with 41 predicted targets. 20 technology companies have been identified as being at heightened risk.

Notes to Editors

About the AAA

A&M’s Activist Alert model includes detailed analysis of listed corporates with a market capitalisation of €200 million or more headquartered in the UK, Germany, France, Scandinavia, Switzerland, Benelux, Italy and Spain. In total, 1,567 European companies were analysed, and their performance compared to 4,570 global peers. We analyse each company using 48 quantitative and qualitative variables derived from publicly available data and assess a company’s relative performance against their global sub-sector peers.

About Alvarez & Marsal

Companies, investors, and government entities around the world turn to Alvarez & Marsal (A&M) for leadership, action, and results. Privately held since its founding in 1983, A&M is a leading global professional services firm that provides advisory, business performance improvement and turnaround management services. When conventional approaches are not enough to create transformation and drive change, clients seek our deep expertise and ability to deliver practical solutions to their unique problems.

With more than 9,000 people delivering services across six continents, we deliver tangible results for corporates, boards, creditors, private equity firms, law firms and government agencies facing complex challenges. Our senior leaders, and their teams, leverage A&M’s restructuring heritage to help companies and governments to act decisively, catapult growth and accelerate results. We are experienced operators, world-class consultants, former government officials, and industry authorities with a shared commitment to telling clients what’s really needed for turning change into a strategic asset, managing risk and unlocking value at every stage of growth.

To learn more, visit: AlvarezandMarsal.com

CONTACT:  

Nicolas Weidmann
Dynamics Group
+41 (0)79 372 2981
nwe@dynamicsgroup.ch
 

Alessandro Farsaci
Managing Director, Restructuring
Alvarez & Marsal
afarsaci@alvarezandmarsal.com

^[1] January to May 2024 inclusive