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Lazard’s Shareholder Activism Monthly Flash Report: April 2020

Apr 1 2020

Lazard’s Shareholder Activism Monthly Flash Report is a special update from the Shareholder Advisory team on the latest developments in shareholder activism considering the market volatility and uncertainty caused by the Covid-19 global pandemic.

Lazard Shareholder Activism monthly report April 2020

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Key observations from the report include:

The activism slowdown continues

  • March’s decline in new campaign activity continued in April, with only 8 campaigns initiated and $1.9bn of aggregate capital deployed
  • April's activity was 54% lower than the prior six-month average while capital deployed was 45% lower
  • Drop off in activity especially apparent on a weekly basis with the 4-week rolling average falling from ~7 campaigns in February and ~4 in March to ~2 in April
  • April's muted activity was most profound in the US and Europe, where 3 and 1 campaign were initiated in each jurisdiction, respectively, relative to past six-month averages of ~8 and ~5; by contrast, the 4 new campaigns in APAC in April were in-line with the prior six-month average

Elliott and Starboard have been the most active players in 2020

  • Despite a relatively quiet April, Elliott and Starboard have remained the most active activists in 2020 YTD, with 7 and 3 campaigns initiated this year, respectively
  • Elliott has deployed $5.6bn into new campaigns this year, the most of any activist

Despite a slowing of new campaigns in April, existing campaigns continued to develop as activists seek to realize their value creation thesis

Settlements and Board seats marginally lower compared to recent months

  • April saw 7 campaigns settle (resulting in 11 dissident Board seats) relative to 10 settlements (for 19 Board seats) in March
  • In 2020 YTD, 28 settlements have resulted in 54 Board seats versus 31 and 57 in the prior-year period, respectively
  • As proxy season continues, 50 Board seats at 11 different companies remain “in play”

Activism-driven M&A will likely remain uncertain in the near-term

  • The evolving situation at L Brands, in which the Company is suing Sycamore Partners for backing out of the Barington-driven deal, underscores the near-term challenge activists will face in catalyzing M&A in the current environment
  • With additional deal cancellations likely, it remains to be seen if activists will continue to pursue their original transaction theses, pivot campaign objectives or suspend campaigns altogether

 

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