IN-DEPTH: Activists switch tactics to gain ground in Canada
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It was a case of Canada dry for proxy contests in the first six months of 2025. But as the year slipped into its second half, more activist situations headed to a vote, accounting for all but one of the board seats won since the end of June.
Diligent Market Intelligence (DMI) data show that the 10 seats secured by activists in H1 were through settlement as investors and Canadian boards navigated market flux and looming tariffs under the Trump administration.
However, as confidence slowly returned in the latter half of the year, the change in tone saw activists secure seven seats via special meeting votes, representing 39% of all seat gains in Canada in the first 10 months of the year.
“After a period of uncertainty or caution, when the picture brightens, or at least is clarified, you are likely to have some activists waiting in the wings, ready to strike,” Aaron Atkinson, partner at Davies, told DMI.
H1 hesitance
The tendency to work toward finding terms in H1 followed a tumultuous 2024 where key lessons were learned, according to Jon Feldman, a partner at Goodmans.
“There were some extremely contentious fights that went the distance and the learning from that experience (on both sides) is that if you can get to the end with minimal pain in a way that is fair and reasonable, then everybody wins," he said.
One of the more acrimonious contests in 2024 played out at Gildan Activewear, where the clothing company's entire 12-person board resigned to make way for the eight nominees put forward by Browning West with its CEO Vince Tyra also stepping down to be replaced by former top boss Glenn Chamandy.
Indeed, Browning West has since maintained its focus on CEO succession having reached a February agreement with aerospace and defense company CAE that saw the activist’s co-founder and partner Peter Lee named as one of four new directors and tasked with headhunting a new CEO.
Other settlements inked at Canada-based targets this year saw legal software provider Dye & Durham give a board seat to Plantro, an activist fund headed by its former CEO Matthew Proud. Plantro has continued to agitate for change, however, in October moving to withdraw its acquisition proposal while also reevaluating its 11% ownership position in the company, where Engine Capital’s Arnaud Ajdler is chair.
Starboard Value was also represented in the share of settlements, securing a seat for its Senior Partner Gavin Molinelli at Algonquin Power and Utilities as it extended a pact agreed in April last year – the U.S.-based activist’s maiden foray north of the 49th parallel. Molinelli’s accession to the board kicked in as Rod West started his term as the new CEO.
“Companies and activists are both realizing that direct discussions are in their best interests, as opposed to proxy contests that are time-consuming and costly for both sides,” said Victor Li, executive vice president, governance advisory, at Kingsdale Advisors.
Back to the ballot box
But while settlements proved the hallmark for the opening half of the year, by the end of October, some activists had changed tack to secure seven seats through a number of key special meeting votes.
Chief among these wins was a September 16 special meeting staged at drilling fluid chemicals company Bri-Chem, with around two-thirds of votes cast backing the quartet put forward by Cenatex’s Barry Hugghins.
A month before that, an activist coalition fronted by Ljubo Mikulic succeeded in revamping the board of Lincoln Gold Mining with two seats gained in a campaign focused on the miner's management and capital strategy.
A cautious cooling off
While activists have interchanged tactics and adapted their approach to suit changing market conditions over the past 10 months to deliver some headline wins, there has been a notable chill in overall activity in the market with many opting for a behind-the-scenes approach in a bid to avoid a costly and disruptive board battle.
Just six companies were targeted by primary- and partial-focus activists in the first 10 months of the year, down from nine in the same period of 2024 and a peak of 16 in 2023.
That slowdown has translated into a 36% drop in board seats gained compared with the first 10 months of last year. According to Goodmans’ Jon Feldman, boards have learned to get ahead of the curve.
“Well-seasoned activists, particularly those who have a track record of success and who are prepared to go the distance are finding that boards are doing what they can to reduce the risk of a protracted and costly proxy contest.”
For now, buoyant share prices and steadier business performance have taken some of the oxygen out of activism. But few expect the lull to last. “Activism is generally a function of poor performance. For now, business seems to be going relatively well and share prices are up. That could change on a dime given macroeconomic issues and if so, could lead to more [activism],” noted Feldman.
