Northwest Arkansas Democrat-Gazette
Investors spur CEO exits in Europe
But corporations resist calls for deeper structural changes
Activist investors appear to find their European targets more willing to do away with management than heed calls for dramatic change — for now.
A wave of campaigns launched in the past 18 months has been followed by the exits of CEOs at companies with a combined market capitalization of more than $225 billion, according to data compiled by Bloomberg. These range from British telecom giant Vodafone Group to Swiss software developer Temenos.
Despite the personnel wins, many activists are still waiting for companies to enact deeper structural changes like breakups, which they say are needed to boost flagging share prices and better position the businesses for the years ahead.
“Breakup campaigns have been harder to execute in the past 12 months,” said Tom Matthews, a partner at law firm White & Case. “M&A and IPO solutions are more difficult given the closure of the debt and equity markets.”
Meanwhile, heads have continued to roll.
Last week, German drug and agricultural company Bayer, which faced pressure from Elliott Investment Management and Temasek Holdings in recent years, announced the early departure of CEO Werner Baumann as it seeks to move on from lawsuits tied to its ill-fated acquisition of Monsanto in 2018.
To be sure, Bayer was in the process of shaking things up at the top even before the recent arrivals of Jeff Ubben’s Inclusive Capital Partners and small-but-loud activist Bluebell Capital Partners. The appointment of exRoche Holding pharma head Bill Anderson as Bayer’s next CEO raises the prospect of activists turning up the heat on a potential split of the company.
It’s a similar story in the United Kingdom, the activists’ favorite hunting ground
in the region.
Vodafone last year ousted CEO Nick Read amid commercial difficulties and a longrunning share price decline. His departure came after Cevian Capital, Coast Capital and French billionaire Xavier Niel at various points built stakes in the company. Earlier in 2022, U.S. activist investor Nelson Peltz revealed a stake in Unilever, and soon after the British consumer goods company announced CEO Alan Jope would be stepping down.
In Switzerland, Max Chuard in January left as CEO of banking software-maker Temenos, which has faced calls from activist investor Petrus Advisers to change its management and conduct a strategy review. Temenos said Chuard had decided it was the right time to step down, having established a strong leadership team.
“Campaigns to remove directors have been more successful than those seeking to break up or divest businesses,” said Malcolm McKenzie, a managing director at Alvarez & Marsal. “This is driven, in part, by the sheer complexity of the decision process, and size, risk and cost of undertaking, underlying any decision to divest.”
While CEO exits can be caused by several factors, and the direct impact of activist pressure is hard to measure, the sheer number of executive departures in the region has been notable.
Other activists working behind the scenes on efforts to transform companies include Elliott at SSE and Third Point at Shell. Both arrived at the U.K.listed energy groups with a common pitch — break up and focus more on renewable energy. Both are yet to be placated.
Oliver Scharping, a portfolio manager at Bantleon, said most activists in Europe are avoiding the public hectoring of companies in favor of private talks with boards.
“Activists have tried the tough guy approach in the past, but champion a less confrontational style today,” Scharping said.