Activist pressure helps reshape U.S. corporates, from Yahoo to Dow

Thu Dec 10, 2015 7:18pm EST
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By Michael Flaherty

NEW YORK (Reuters) - Activist investors are building bigger stakes in bigger companies and their influence is helping reshape the landscape of corporate USA.

    Merger discussions between Dow Chemical (DOW.N: Quote) and DuPont (DD.N: Quote), two of the biggest and oldest names in the U.S. chemical industry, were prompted, at least in part, by activist investors.

They also played a role in Yahoo's (YHOO.O: Quote) announcement to ditch the spinoff of its $32 billion stake in Chinese ecommerce giant Alibaba BABA.O in favor of seeking the sale of its core Internet business.

   The penchant for top-tier activists to target large U.S. companies is expected to gain traction, as the funds have growing pots of money to spend and need to put larger chunks of cash to work.

Investors have poured more money into activist hedge funds as successful campaigns to force changes at hundreds of U.S. companies have produced index-beating returns during the past few years.

Activists played a direct role in half of the 10 largest U.S. mergers and acquisitions announced this year, Thomson Reuters data show, in deals whose total combined value topped $260 billion. In the prior four years combined, activists played a role in only a handful of the top 10 M&A deals.

The move toward bigger targets comes as the overall number of U.S. activist campaigns is set to surge past 400, data from research firm Activist Insight data show, eclipsing last year's post financial-crisis record of 300 in a trend expected to continue into 2016.

"We're hearing from a lot of activists, even first-time activists, who are gearing up for proxy season next year," said Bruce Goldfarb, chief executive of proxy advisory firm Okapi Partners. "Even if the markets get rattled by an interest rate move next week, I think we'll see record activity in shareholder activism next year."   Continued...

A DuPont logo is pictured on the EMEA (Europe, Middle East & Africa) and Du Pont de Nemours International SA building in Grand-Saconnex near Geneva in this August 4, 2009 file photo.  REUTERS/Denis Balibouse/Files