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Activists have wind on their sails. Globally, the number of campaigns is the highest since 2018. It’s almost strange. Rather than having to be surrounded by boards and management, they now seem to be pushing open doors.
BP is a typical example. On Wednesday, CEO Murray Autinros announced a strategic overhaul just weeks after it was revealed that Elliott’s management had taken a close to 5% stake in the underperforming UK oil major. did. A year ago, Auchicloss was threw weight behind its previous strategy of reducing oil and gas production by quarter by 2030 and investing heavily in renewables.
Elliott has also seen Swift’s results at Honeywell International. Others also enjoy quick rewards. Nelson Peltz’s Trian Partner won a board seat for Rent Kill after his first three months of standing as a British pest control company. The FTSE 100 Conglomerate Smith Group announced its disbandment shortly after US activist Engine Capital called for it to split.
The fact that many campaigns begin behind closed doors often cloud data on how quickly activists achieve results. However, taking the CEO’s resignation as an indicator, the victory appears to be strengthened.
According to Barclays’ 2024 review of shareholder activism, 27 chief executives resigned last year from companies targeting activists above the four-year average. In the past two years, the fifth CEO of the target company has resigned within a year. Activists launching campaigns. By reference, the average annual sales of the S&P 500 Index CEO is 12%.
There are a few factors that can be done while playing. First, many well-known campaigns these days have targeted low-performing conglomerates. There, activists can lay eggs to other frustrated investors.
Of course, disbanding conglomerates and cumbersome portfolio companies is nothing new. However, dismantling the conglomerate is a better strategy in a more robust M&A environment. A widely promoted revival in the animal spirit may further help activists’ causes. BP confirmed on Wednesday that it will check its lubricant business castrol. This could be worth around $10 billion. Auchicloss said it would target a total of $20 billion divestment by 2027.
Increased passive investments could also play a role. Index trackers are increasingly occupying the top slots of the company’s shareholder register, rather than institutional investors in vocals. This creates a gap in which activists intervene and keep the committee and control on fire, and often receives strong support from other minority shareholders.
The clever board preempts the attack by acting like the activists themselves. If BP’s performance is reassessed over the next few years, it will definitely be the biggest point. Its chairman, Helju Rand, should cut ties with his previous strategy a year ago. At the very least, he would have been able to claim credit, not an activist.
nathalie.thomas@ft.com
