Activist investors are not a new phenomenon. Carl Icahn, T. Boone Pickens and more recently Daniel Loeb have all cemented their reputations as ‘corporate raiders’ by acquiring equity stakes in businesses and forcing change—often singling out a company’s board—with the aim of boosting the target’s share price.
Over the last few years, US-based activists have looked to enlarge their hunting grounds, increasingly seeking European targets in their quest for yield. One contributing factor was the financial crisis, which led to a surge in shareholder activism. Between 2009 and 3Q 2014, activist funds boosted their combined AUM from $36.2 billion to north of $112 billion, according to JP Morgan research.
Enter Elliott
One of the most active players in Europe in recent years has been Paul Singer’s Elliott Management. Founded in 1977 with a reported seed investment of $1.3 million, the hedge fund is now known as one of the most aggressive investors on Wall Street, boasting more than $32 billion of AUM.
Elliott’s investments are sector-agnostic and appear to be driven entirely by the underlying principle of activist investing: finding companies with unrealised shareholder value and presenting—in many cases forcing through—a solution to unlock that value. Elliott also makes good use of European disclosure rules, often building up stakes below the reporting threshold to circumvent public scrutiny and take targeted companies by surprise.
The firm has been particularly busy in Europe during the past 24 months. Just this week, it was disclosed that Elliott had accumulated a 4.9% holding in Fidessa, a maker of financial services software that has agreed to be acquired by Temenos in a deal worth £1.4 billion.
Here are eight more of its noteworthy forays:
NXP Semiconductors: Cheap as chips? Not so fast
After a long, hard battle, this one looks like a win for Elliott. Earlier this week, Qualcomm sweetened its offer for Dutch chipmaker NXP to $127.50 per share, raising its bid to some $44 billion, $6 billion more than the original deal that was struck in 2016. Elliott reportedly took a small stake in NXP last summer, which it increased to 7.2% earlier this month. A side effect: The firm’s badgering of Qualcomm on its NXP offer left the US chipmaker vulnerable to rival Broadcom‘s recent takeover offer, creating an entirely different headache.
Sky: Value in broadcasting
Elliott reportedly owns a 2.1% holding in European media and telecoms giant Sky, which is preparing a shareholder vote on a recent £11.7 billion offer from 21st Century Fox to acquire the stake in the business it doesn’t already own. As ever, Elliott isn’t particularly forthcoming with its intentions. Indeed, a Bloomberg report indicated the fund hadn’t yet determined whether it would take an active or passive position as of late January.
GKN: Takeover on the cheap?
Elliott reportedly holds a 1.7% stake in UK engineering company GKN and is trying to pressure the company’s board to enter takeover talks with Melrose Industries after GKN rebuffed a £7 billion merger bid last month, to which Melrose responded with a hostile offer worth £7.4 billion. GKN chief executive Anne Stevens had little interest, saying the bid fundamentally undervalues the business and that Melrose ‘is trying to buy GKN on the cheap and with GKN’s own money’.
Smith & Nephew: Demanding divestments
Elliott holds a reported 2% stake in UK medical device maker Smith & Nephew. Last October, the fund was purportedly pushing the company’s board to divest units in an effort to become an appealing takeover target in the consolidating medical device and healthcare space.
GEA: Rethink the restructuring
Food processing machinery company GEA was also targeted last October, after Elliott acquired a 3% holding. The investor reportedly questioned the scope of the German company’s restructuring plan, seeing the potential for further cost cuts and other efficiency-driving measures.
Stada: Securing a sweetened deal
Paul Singer’s firm was a protagonist in one of last year’s most protracted takeover battles, Bain Capital and Cinven’s €5.4 billion deal for German drugmaker Stada. Elliott demanded a higher price than the initial agreement of €66.25 per share for its reported 15.2% holding, in the end securing €74.40 per share, or about €180 million in additional payment.
AkzoNobel: Playing hardball
AkzoNobel became an Elliott target last year after the Dutch chemicals giant rejected several takeover bids from PPG Industries worth between €24 billion and €27 billion. The battle continued throughout the summer and included moves straight from the activist investor’s playbook, such as demanding an extraordinary general meeting in a bid to oust the company’s chairman. Elliott’s efforts resulted in AkzoNobel appointing three new directors to its board and an agreement to split the company into two entities.
Uniper: An opportunistic play
In a move similar to the tactics displayed during the Stada takeover, Elliott acquired a reported 7.4% holding in energy company Uniper in an effort to apply pressure on Finland’s Fortum to increase an €8.1 billion offer for the company. As of January, Fortum’s board declined to enter talks with a Reuters report citing the company’s CEO Pekka Lundmark saying: ‘We don’t need any deals with the activists.’
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