August 13, 2020

2020 US Mid-Year Activism Review

The unprecedented market volatility and economic uncertainty driven by the world-wide pandemic have impacted M&A activity, as well as the 2020 proxy season. Refinitiv reports that, worldwide, some 22,600 takeovers have been announced so far this year, down 18 percent from the same time last year. Of greater impact, the global total dollar value of takeovers declined 38 percent year-over-year. Within the United States, the number of takeovers YTD is down 10 percent, but the dollar value of those transactions has declined 66 percent. Acquirers appear to be executing fewer transactions, and the deals that do occur are smaller than in past years.

The “fewer and smaller” trend can also be observed in definitive proxy contests thus far in 2020. In contrast to 2019, which saw a highest ever median market cap of $671 million, the median market cap in definitive proxy contests in 2020 dropped back to $267 million, the lowest since 2016. Similarly, the number of definitive proxy contests in the first half of 2020 fell to 11, the lowest since 2011. Notably, the smaller number of fights seems to reflect greater selectivity on the part of activists, who posted their highest win rate over the past decade, at 82 percent.

Control Fights

This proxy season featured an increase in the number of control fights relative to prior years. While dissidents had succeeded in only a handful of control fights in prior seasons, thus far this year four boards have experienced majority change as a result of activist pressure, compared to two for the full year last year. Apparently, activists concentrated their resources on…

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