Back to News

Activists Find New Routes to M&A Opportunities

Published: December 4th, 2019
Insurgent managers are targeting larger companies and are taking on different roles, a panel of experts told The Deal Economy's 2019 conference.

Activist investors are taking different approaches than they have in the past but continue to create M&A opportunities for big corporations, a panel of experts told the Deal Economy’s 2019 conference on Wednesday, Nov. 20.

“We’re seeing activist activity that is on par with what we’ve seen in previous years but it looks a bit different than it has in the past,” said Kimberly C. Petillo-Decossard, a partner at Cahill Gordon & Reindel LLP. “They are targeting larger companies more than they have historically. They look different. I think they are taking on different roles.”

Petillo-Decossard noted that activist Starboard Value LP injected an unusual $250 million cash allocation to Papa John’s International Inc. (PAPA) in an effort to discourage the chain’s embattled founder and former CEO John Schnatter from launching a campaign.

“Starboard made a preferred investment in Papa John’s,” she said. “That’s not usually what you think of when you think about activism. They are starting to look a little more like investors in private equity and private equity is looking a little more like activists. It [activism] will continue to be a driving force in 2020.”

Jelena Guzenko, director of mergers and acquisitions at Siemens AG (SIEGY), said that the German multinational conglomerate has identified a number of acquisition opportunities because target companies are motivated to be sold to strategic companies rather than pursue an initial public offering that could make them vulnerable to insurgent managers.

“We are seeing lots of opportunities on the buy side for us because lots of targets are being motivated to be sold to strategics like ourselves rather than pursuing an IPO strategy and potentially dealing with shareholder activism,” Guzenko said.

She noted that Siemens itself is less at risk of being targeted by an activist because of German regulations, which limit such opportunities. However, she said the company has pursued an M&A strategy itself.

“We have been breaking out our conglomerate structure and have our companies act more as a fleet of ships rather than a large ship,” she said.

Siemens in May moved to spin off its gas and power business and focus on its digital industries and smart infrastructure business.

Patrick Turner, managing director, lower middle market private equity firm VSS, said that he has been very busy focused on improving acquired corporations from an environmental, social and governance perspective.

“I am busy because smaller companies don’t really have any governance. They don’t have succession planning and there are a lot of other things we can help these companies with,” Turner said.

Editor’s note: The original version of this article was published earlier on The Deal’s premium subscription website. For access, log in to or use the form below to request a free trial.

This Content is Only for The Deal Subscribers

The Deal provides actionable, intraday coverage of mergers, acquisitions and all other changes in corporate control to institutional investors, private equity, hedge funds and the firms that serve them.

If you’re already a subscriber, log in to view this article here.

More From Activism


Activist Investing Today: Privet’s Rosenzweig on Synalloy, Covid-19

By Ronald Orol
Published: March 30th, 2020
The partner at the event-driven and value-oriented insurgent fund explains why he is plodding ahead with a change-of-control director contest at a metals and specialty company even though he is 'cognizant' of the coronavirus' effects on the world.

Activist Investing Today: Coast's Rasteh on FirstGroup, Covid-19

By Ronald Orol
Published: March 23rd, 2020
The founder of the New York-based activist fund explains why he's sticking with his investment and campaign at transport and school bus company FirstGroup — one of the fund's largest positions — even as its share price gets battered.

Activist Investing Today: V&E's Elbaum on Covid-19 vs. 2008

By Ronald Orol
Published: March 13th, 2020
The co-head of the shareholder activism practice at Vinson & Elkins explains what the 2008 financial crisis can teach us about how activists might react and perform during the coronavirus outbreak.