IN-DEPTH: Activist nominees make ground at UK targets
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Activists managed to reshape the boards of many U.K.-listed companies in 2024 with a 40% increase in the number of nominees to secure a seat.
According to Diligent Market Intelligence (DMI) data, 14 activist nominees secured seats at U.K.-based targets last year, compared to 10 in 2023. The 14 nominees were elected across eight company boards, compared to just two in the previous 12 months.
Of the eight companies to open their boards to activist nominees, only two went to a vote, with the rest being achieved through settlements.
Below, DMI examines the companies that saw the addition of new activist candidates:
Aseana Properties
Aseana Properties was first targeted by LIM Advisors in May, with the activist nominating Thong Kok Cheong and Clare Mariam Binti Muhiudeen to the Asia-focused developers board, on the basis that it needed ‘‘fresh eyes and experience’’ as it struggled to complete a key asset sale. The activist nominees were subsequently elected by shareholders at a July 3 special meeting, receiving 58% support. The activist returned with a new campaign in September to oust Aseana Chairman Nick Paris from the board as well as other demands. However, Paris and two other directors later exited the board, and the special meeting requisition was withdrawn. Since then, Aseana Properties has named Leong Kheng Cheong as its new CEO bowing to pressure for a leadership revamp.
BenevolentAI
At a May 2 annual meeting of BenevolentAI and following an agreement inked in April, Ken Mulvany, the founder and former chair of the biotech, secured four seats on its board including one for himself. The meeting saw four incumbent directors resign including then-Chair François Nader. "The board acknowledges that our dialogue with Mr. Mulvany, our largest shareholder, has resulted in an agreement which we believe is in the best interests of shareholders, and broader stakeholders, and the stability of our operations and creates the potential to establish a governance platform for the future progress and value creation of the business, in the best interest of patients,” Nader had commented in an April statement.
Digitalbox
In October, shortly after it announced the launch of a strategic review, Digitalbox was targeted by 20% stakeholder Downing Strategic Micro-Cap Investment Trust which requested the digital media company to hold a shareholder vote to appoint its nominee Grahm Boyce to the board. In November, the company agreed to appoint the suggested candidate and in return the activist agreed to withdraw its notice for the special meeting.
Elementis
After facing pressure from several investors to unlock value for more than a year, Elementis appointed Harwood Capital Management founder and CEO Christopher Mills to its board in December. The specialty chemicals group stated that Mills would “support the board on completing existing initiatives, including the strategic review of Talc, and potentially new initiatives to narrow the gap between the share price and the company's intrinsic value.” In April, Gatemore Capital Management had urged the company to replace its CEO Paul Waterman and to launch a strategic review with Waterman stepping down some six months later. Franklin Mutual Advisors and Odyssean Capital had also heaped pressure on the company in calling for a sale.
Entain
In January last year, Eminence Capital secured a seat for its founder and CEO Ricky Sandler on the board of sports betting and gaming company Entain while also receiving a commitment to work with the activist to identify an additional ‘‘mutually agreeable’’ non-executive director. The agreement came just three weeks after Jette Nygaard-Andersen stepped down as the betting group’s CEO. Following Entain's acquisition of STS Holdings in June 2023, Eminence had issued a public letter to the board criticizing the decision, labelling it a “shareholder value-destroying strategy.” Dendur Capital and Sachem Head Capital Management also took activist stakes in the company following the acquisition, both voicing concerns over sales in Entain’s core markets.
PRS Reit
In August, an investor alliance led by Harwood Capital Management called for a vote at PRS REIT to remove its Chairman Stephen Smith and director Steffan Francis, and to replace them with Harwood boss Christopher Mills and Robert Naylor. The activist alliance said that they would like PRS to consider various avenues to close the value gap affecting its shares, which at the time, traded at a roughly 27% discount to the REIT’s net asset value. The Manchester-based property rental group hired an investment bank to weigh options to create value for shareholders and had set up a board committee to negotiate with the investor group. Ultimately, the company announced in September that Smith would step down ahead of its 2024 annual meeting, and that it would appoint Mills and Naylor to its board. In December, it revealed that it was in active discussions with “a number of interested parties” in relation to a potential sale.
Rentokil
Rentokil was one of three companies targeted by Trian Fund Management last year. In June, Nelson Peltz’ hedge fund became a top 10 shareholder in the pest control company reaching out to present its “ideas and initiatives to improve shareholder value.” Following a 20% drop in Rentokil’s share price in September after it was announced that the company was behind on its targets, the investor ramped up engagement securing a seat for its Head of Research Brian Baldwin on its board. it's understood the brand has since been looking at a potential divestment of its French workwear unit, with estimates that it could fetch 500 million euros ($530 million) in a sale.
The Works
Kelso Group secured two board seats at discount retailer The Works some six months after it disclosed a more than 5% stake in the company. Kelso Group CEO John Goold and Mark Kirkland, chief financial officer at the firm, were appointed to the board to act as non-independent directors, focusing ‘‘on all matters relating to shareholder value.”
