FT Forecasts 2018: Companies to get tough on activist investors
The FT's chief business commentator John Gapper predicts that next year companies will be much more aggressive when they face hostile takeover bids or attempts by activist investors to destabilise them.
My big prediction for 2018 is that we're going to see much more aggressive action by companies when they face hostile takeover bids or attempts by activist investors to destabilise them. I think we saw it at the London Stock Exchange, when it stood up against an attempt by Sir Christopher Hohn to dictate who should be the chief executive. We also saw it at Unilever when it faced an approach from Kraft Heinz. Both those companies stood up. I think we're going to see more of that, and I think we're going to see more boards being prepared to be much more aggressive and hostile in their own actions.
The implication is that the hedge funds - activist investors - are going to have to be much better prepared for people coming at them. And there's going to be a much more public battle, because I think companies are getting tired of just being passive recipients of other people criticising them.
The big winners in this scenario are large companies that have become punching bags for activist investors. The losers would be the activist funds that have had it all their own way. And they would also be companies that team up with activists in order to destabilise other companies. They're going to have to be in the spotlight themselves. I think the best case scenario is that some of the good ideas that these activist investors come up with are incorporated into strategy and it makes the company stronger. The downside is that we could see large, public, bitter battles that destabilise companies and go on for a long time.