Eleven seats were secured through settlements in the first nine months of this year at four Europe-based companies, compared to seven secured at six companies in the same period in 2022. Of the contests that went to a vote, the level of seats secured remained largely the same as last year at 24.

Although activists managed to secure more seats through settlements this season, they have been less ambitious in the number of companies publicly targeted, a pattern that is observed by many to have been driven by a set of unique situations.

“The trend this year seems to be reflective of very specific situations resulting in a greater number of board seats being sought than might be the case in a more run-of-the-mill scenario,” Tom Matthews, head of the EMEA activism practice at White & Case, told DMI.

“It’s a large number of seats spread across a noticeably smaller number of companies than last year. I would say that last year is a more accurate reflection of the more general trend which is one or two board seats max being sought by activists.”

However, a consistent and annual feature behind many settlements in the region is a concerned investor base, as Cas Sydorowitz, global CEO at Georgeson, explained. “In the U.K. and Europe, settlement likely occurs because the company is hearing from a sufficiently broad community of investors who are dissatisfied with the board or management. It is important to consider how many shares an activist holds because this affects their influence on the company.”

Below, DMI takes a look at this season’s settlements and the truces that allowed companies to get back to business:

GAM Holding (5) – Building a bridge

After Swiss money manager GAM Holding failed to rally sufficient support for a sale to British peer Liontrust Asset Management in August, it was targeted by NewGAMe, an activist alliance led by French billionaire Xavier Niel and wealth management firm Bruellan. The dissidents had been vocal in opposing the deal and had offered to replace the bridge financing with a 25-million-franc convertible bond – an offer rejected by GAM as insufficient to keep the company running. “The level of capital injection required in the immediate foreseeable future exceeds 100 million Swiss francs,” GAM had asserted in an August 21 statement.

However, after the Liontrust bid flop in late August, GAM returned to talks in a bid to resolve its capital needs which resulted in a pre-meeting agreement with NewGAMe on the composition of a new board with the incumbents agreeing to stand down to make way for the dissidents’ five nominees.

In exchange for the board overhaul, Rock Investment SAS, a member of the activist alliance, agreed to provide GAM with a mix of short- and long-term funding up to an increased total of 100 million Swiss francs.

Further top table reform followed with the appointment of Elmar Zumbuehl as GAM’s new CEO in early October. The company’s former global chief risk officer had been proposed by NewGAMe as its candidate for the top job a week earlier.

Revolution Beauty Group (4) – Listening to the investor community

In another of the season’s settlements that saw a change in CEO and other top execs, Boohoo withdrew its contest at Revolution Beauty Group. That settlement, made public in mid-July, saw the cosmetics company finally part ways with its CEO Robert Holt and Chairman Derek Zissman, and appoint four new directors nominated by the U.K. online fashion retailer.

Holt, Zissman and another director had previously been removed from the board by 74% of shares cast at a June 27 annual meeting but were reinstated a week later by its remaining director, much to the dissatisfaction of Boohoo which had led the reform campaign as the company’s top shareholder. These actions ‘‘contravened corporate governance best practice and disregarded the expressed opinion of the company’s shareholders,’’ complained Boohoo at the time.

After hammering out the settlement a couple of weeks later, Revolution Beauty said it brought an end to uncertainty and avoided ongoing costs and disruption that would be associated with “any alternative” courses of action, allowing it “to get back to focusing on its core business objective.”

Cellnex Telecom (1) – Pushing for progress

In another one-month campaign, the Children’s Investment Fund (TCI) sought to refresh the board of Spanish mobile phone tower operator Cellnex, securing one seat for its partner Jonathan Amouyal in late April.

A month earlier, the British activist fund had approached Cellnex’s board to express concerns about the slow rate of progress in identifying a new CEO to replace Tobias Martínez Gimeno who had stepped down in January, and warned about a potential move to oust three board members.

Shortly after TCI disclosed its stake, Cellnex announced the resignation of then-Chair Bertrand Kan and Peter Shore, citing “irreconcilable differences with the board in relation to the management, governance and succession process of the company.”

In May, the wireless communications operator appointed Telecom Italia veteran Marco Patuano as its new chief executive, two days after giving TCI its board seat.

Ericsson (1) – Power

In January, Swedish telecoms group Ericsson nominated Cevian Capital senior partner Jonas Synnergren to its board and proposed a new chairman after the activist called for governance improvements, starting with measures to curb the power of the company’s two large traditional investors – the investment vehicle of the Wallenberg family and local rival Industrivarden.

Synnergren was subsequently elected as part of management’s 10-member slate at a March 29 annual meeting. The activist has featured on Ericsson’s share register since 2017.

Behind the scenes

Current macro-economic issues are not considered by industry sources to have a direct impact on a company’s willingness to settle, rather the views of its shareholders, with many such negotiations taking place behind the scenes. “Remember, this is based on public demands. The majority of activism goes on behind the scenes. We have seen plenty of such private advocacy for board change from activist clients this year,” noted Matthews.

And, while a board or management change at a company may indicate involvement by an activist, there may also be other changes aside from electing an activist’s candidate to the board, noted Sydorowitz. “Onlookers are often not aware of the many actions happening in an activist situation.”