Jump in shareholder activism to hit Australian companies
June 9, 2014 Leave a comment
Jump in shareholder activism to hit Australian companies
Published 29 May 2014 14:49, Updated 30 May 2014 11:17
Joyce Moullakis
Australian boards should brace for an uptick in shareholder activism, as lawyers and bankers urge preparedness and engagement with activists and proxy firms to navigate a typically disruptive process.
Shareholder activism remains in its infancy in Australia, but the recent arrival of US specialists in this area, as well as the formation of the Thorney Opportunities Fund, suggests more activity is on the horizon.
Bankers and lawyers were debating the topic at the Akolade mergers and acquisitions forum in Sydney on Wednesday, and there was an overwhelming view that Australia will see more activism.
King & Wood Mallesons partner David Friedlander says many activist funds had kept their “powder dry”, and local companies needed to be prepared for increased activity. “We will see more activity . . . activism is going to have a pretty good run,” he adds.
Friedlander says engaging with activists and investors early was the best way forward. “They [the activists] are highly ego-driven guys and you need to spend a bit of time,” he says. He also highlighted proxy and governance firms, saying that if it came to a shareholder vote at least 15 per cent would follow the advice of proxy firms, despite input from the company.
Local fund manager Perpetual is still attempting to unwind Soul Patts’s cross-shareholding with Brickworks. And earlier this month, the Texas-focused oil explorer, Antares Energy, drew the attention of Lone Star Value Investors. Melbourne billionaire Alex Waislitz, head of the new Thorney fund, is also being closely watched.
Arnold Bloch Leibler partner Jeremy Leibler noted that without activist shareholders, which often pushed companies to engage with suitors, Wesfarmers’ bumper takeover of Coles Group might not have happened. Private equity firms were circling Coles prior to the board opening up an auction.
“When you can find that leverage or that crack that is sometimes all you need . . . to set off the house of cards,” he told the conference.
Lazard’s head of corporate advisory in Sydney Lachlan Edwards agreed that activism would climb locally. “I think you’ll see much more of [it] through the cycle,” he says, noting that typically 80 per cent of shareholder activism was conducted privately and the rest publicly. He joined other panellists in urging engagement with activists. “You are more likely to get run over if you try to stop the activists straight off.”
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