Shareholder Activism in 2015

“More activists targeted more companies than ever before” Activist Insight, 2015

March 2015

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2014 saw a surge in activist activity globally and in Australia. The types of activism fell broadly into these categories:

Are you a target?

Board related – removal of NEDs, MDs and entire boards

Other governance issues / Two Strikes

M&A outcomes

Business strategy

Balance sheet

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The Issues that Attract Activists are Varied.

Institutions are actively supporting the activists – at both a portfolio manager AND governance level where they’ve bought into the value of the

alternative strategy.

                          Environmental, social                       and governance (ESG)                     issues are becoming                  mainstream and activists              are banding together          with sympathetic funds    to press for change.

Two Strikes provides an excellent medium for dissent and first - mover control strategies by activists.                      

Too many boards are                  complacent; or fail to

see               the risks; or are getting          

outdated advice.

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Sometimes they are corporate investors, hedge funds or private equity

Increasingly, they are specialist investors whose purpose in life

is to extract value from any perceived opportunity

Other times they are smart individuals or

boutique funds willing to risk a fight

Activists – who are they?

But also…They are large institutions driven by changing local and global

governance mandates OR significant on-register positions.

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Historically most activist or dissident action in Australia has been confined to smaller caps. Since early 2012 activists have shifted gear. Qantas, Fairfax, Echo Entertainment, Dart Energy, Brickworks/WH Soul Pattinson, Billabong, have all been targeted plus institutional agitation at Westfield Group, Newcrest, Leighton and David Jones.

This follows the pattern of US activism over the last six years. Activism built slowly then picked up considerably from 2012, to the point where some of the largest US corporations have come under attack; Microsoft, Pepsico, Yahoo, Dow Chemicals, Walgreens, eBay, Herbalife & Allergan.

Last year smaller US activist funds looked over the Australian market. With the current AUD margin, many stocks are looking cheap to cross-border predators.

Local activists such as Sandon Capital, Mercantile Investments, Ariadne, Thorney Opportunities Fund, Allan Gray, are cashed up and looking hard for new opportunities.

Foreign-controlled investment banks are working overtime on new activist and M&A projects – some will eventually go public.

What’s Changed in the Local Landscape?

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Practical Steps.

Examine your board Know your shareholder base

Perform financial and peer reviews Assess corporate governance

Develop a communications plan Develop a shareholder…

Assemble your communications team

Develop an activist response manual

…and media engagement strategy

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GPS – Specialists in Defending Activist Campaigns & Proxy Fights

Section II

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GPS provides a suite of tailored services to support a company defending against an activist campaign or proxy fight.

These include:

Our Services.

Strategic & tactical advice

Beneficial owner

profiling

Share register

characterisation

Corporate Governance and Proxy

Advisor Support Program

Corporate Governance

Impact Study

Discrete institutional

& retail shareholder

research

Vote modelling

Proxy solicitation

Bespoke micro

websites

We are happy to discuss our experience and insights

Murray Williams

Activism & M&A

(0411 11 90 90)

Maria Leftakis

Governance & M&A

(0411 275 275)

Andrew Thain

Proxy Fights, Capital Raisings & M&A

(0411 432 221)

Contact Us