Investor Activism May Surge in Canada as Slowdown Takes a Toll

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(Bloomberg) — Shareholder activism is poised to develop in Canada this yr, as buyers flip up the strain on administration groups for higher returns after a tumultuous yr in markets, in accordance with a prime company lawyer. 

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“Shareholders are seeing a major quantity of pink on their screens, and now they’ve had time to strive to determine which of those corporations ought to be a goal and which of those corporations they will truly impact change at,” Walied Soliman, chairman of Norton Rose Fulbright in Canada, mentioned in an interview. 

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Canada noticed 26 new activist campaigns in 2022, down from 30 a yr earlier, in accordance with the Bloomberg world activism league tables. Norton Rose was the main legislation agency in Canada, and among the many prime 10 globally, for advising corporations in activist conditions. 

Some of the notable campaigns of 2022 was Elliott Funding Administration’s push for change at oil producer Suncor Vitality Inc., the nation’s second-largest oil producer by market worth. Elliott launched a broadside at Suncor’s security report and working outcomes, saying it was time for an overhaul of administration. 

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The funding agency gained three Suncor board seats and is now concerned in a seek for a brand new CEO. Elliott additionally lobbied for a overview of the corporate’s gas-station enterprise, and Suncor performed one, however the board opted to not promote the unit. 

“Most of those conditions are solved earlier than the general public hears about them,” mentioned Soliman, whose agency suggested Suncor. “Fairly often boards work constructively — notably after they’re coping with a big shareholder group on arising with an answer that doesn’t contain public agitation.”

One other noisy marketing campaign concerned shareholders of Turquoise Hill Sources Ltd. who opposed a takeover bid by Rio Tinto Group. Rio accomplished the deal in December after elevating its bid to $3.1 billion. 

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Canada stays a “pleasant jurisdiction” for activist shareholders and hostile takeovers, the lawyer mentioned. It’s comparatively straightforward for an investor with a small stake to requisition a shareholder assembly, for instance. 

One present case includes property investor Sandpiper Group, which, together with one other firm, owns 9% of First Capital Actual Property Funding Belief and has known as a shareholder assembly. Sandpiper needs 4 seats on the board and adjustments to First Capital’s plans to promote property. The 2 sides are tussling over whether or not the assembly ought to be held in March or Might. 

Canada’s S&P/TSX Composite Index misplaced 8.7% final yr. That was nicely forward of the S&P 500, thanks to very large features by vitality shares, however most sectors have been down and 65 corporations within the index noticed their share costs drop by greater than 20%. 

The variety of activist campaigns elevated greater than 7% globally final yr, led by a leap in these concentrating on tech corporations, in accordance with information compiled by Bloomberg. 

What Bloomberg Intelligence Says

Shareholder activism picked up in 2022 after slipping within the prior two years, accelerating in 2H with massive know-how names like Alphabet and Meta drawing probably the most curiosity amid a significant selloff within the sector. Campaigns concentrating on environmental, social and governance goals remained elevated, together with ones at Coke and Shell. 

— Rob Du Boff, Senior ESG analyst

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