LONDON, Sept. 26, 2016 /PRNewswire/ -- While shareholder
activism in Europe still hasn't
matched the levels seen in the U.S., investors and the public are
becoming accustomed to the idea of shareholders agitating for
changes at struggling companies.
"The train is running and it's running one way," said CIAM
co-founder Anne-Sophie d'Andlau today at The Deal's Corporate
Governance and Activist Investing Conference. "There is no way
around." Paris-based CIAM is an
activist alternative asset management firm.
The contrast between approaches to activism on both sides of the
Atlantic was a recurring theme at the conference, held here in the
financial capital of Europe. For a
variety of cultural, legal and regulatory reasons, U.S. activists
tend to be more confrontational than their counterparts in
Europe and more likely to work in
public. Nonetheless, the consensus among the panelists was that
activist investing will continue to expand as regulators and the
public become more comfortable with the strategies involved.
Gerrit Frohn, Head of Private
Equity Corporate Finance EMEIA at EY, noted that as activists make
stronger cases for their approach, acceptance becomes more
widespread. "The public now sees that it's not just about breaking
up companies," he said during the event's leadoff panel, titled
"Stay Informed: Tracking the Evolution of Activist Investing in
Europe."
In addition, "the homogenization of shareholder bases," is
helping to push activism into new regions, according to
David Rosewater, who leads the
activism defense team at Morgan Stanley. Rosewater downplayed the
differences between U.S. and European activists, noting that
"Bumpitrage" and other aggressive tactics are already common in
Europe. And, Rosewater said, most
activists have largely abandoned their old swashbuckling ways.
"Activists with slogans like 'Surrender the Booty! – those days are
past." Rosewater was part of a panel titled "Stay Strong: How
Companies Can Effectively Engage with an Activist During a
Campaign."
But because activists in Europe
still work primarily behind the scenes, the pace of campaigns tends
to be much slower. In the U.K. for example, activists and
management first "engage in a dance" of negotiations, rather than
go to war immediately, explained Richard
Bernstein, founder of Guernsey-based Crystal Amber Fund.
Bernstein spoke on a panel titled "Stay Focused: How Activism Plays
Out at Small and Mid-Cap Companies."
For any U.S. activists contemplating bringing the old
slash-and-burn, media-first approach to Europe, Andrew
Honnor has a warning. "This is such fun, it's fun stuff. The
media adore it. But you've got to be careful," said Honnor,
managing partner at Greenbrook Communications. Besides, an all-out
media blitz often isn't necessary; the mere threat of going public
is a powerful tool.
In fact, Barington Capital founder James
Mitarotonda, speaking on a panel devoted to explaining
activist campaigns in the U.S. and Canada, said activists should prefer to work
quietly. "We're not always right, we need to be open to what
[directors and management] have to say," he noted.
Corporate executives would welcome that attitude. In one of the
day's keynote interviews, RPC Group CEO Jamie Pike urged his peers to learn the
personalities and tendencies of activist investors and that some
are more ornery than others. "Knowing your activist is key," Pike
said during an interview conducted by FTI Consulting Senior
Managing Director Edward Bridges.
Some activists, Pike added, are "not interested at all in listening
to what management has to say."
For CEOs confronted with an obstreperous activist, Pike had
three pieces of advice: "First, don't take it personally. Second,
don't take it personally. And third, don't take it personally."
Panelists at a session titled "Stay Ahead: How Boards Can Remain
Proactive and Deploy Strong Governance & Leadership
Initiatives," differed somewhat on the value of diversity among
directors. Amber Capital CEO Joseph
Ourghourlian argued that women directors, for example, can
"create an entirely new environment" by asking challenging
questions. But Ken Lever, former
Xchanging plc CEO and now a director on three boards, countered
that just asking questions isn't enough. Diversity works best, he
said, when directors also help find the answers.
Attendees at the conference also heard keynote interviews with
Gresham House CEO Tony Dalwood and
Elliott Advisors' Gordon Singer, who
heads that firm's London office.
Both outlined their approaches to activist investing. In another
session, James McNally, a
London-based partner at Schulte
Roth and Zabel offered a review of current legal and regulatory
issues. The program also included a session covering proposed
guidelines for communication between shareholders and supervisory
boards in Germany.
The London event followed a
similar conference staged by The Deal and parent TheStreet, Inc. in
New York this past June.
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