Global Credit Research - 09 Apr 2015
New York, April 09, 2015 --
Shareholder activism continues to rise and could have negative
implications for credit investors, said Moody's Investors
Service in a new report.
Moody's analysts noted that in
the first three months of 2015, there have been 54 cases of
shareholder activism across North American non-financial
companies -- up from 43 cases during the same period in 2014.
Last year was another record year for activists with 222 cases
of companies targeted, up slightly from the prior record of
220 in 2013. Moody's said the steady increase in shareholder
activism could raise event risk for credit investors, such as
changes to a company's strategic direction and/or financial
priorities.
"In 2014, activist shareholders
succeeded in challenging managements and boards at some of the
largest US companies, pushing them to make sometimes
transformational changes," said Moody's Vice President
Christian Plath. "No company is immune -- and in recent years,
blue-chip firms like Apple, DuPont, PepsiCo and General
Motors, among others, have become targets."
Of the companies that have been
targeted by activist shareholders since the start of this
year, over 40% were also targets in 2014, suggesting that
activists will continue to keep up the heat.
"Shareholder activism is rarely
good news for credit investors, and we have seen an uptick
this year," said Plath. "In many cases, shareholder activists
pursue short-term initiatives like share buybacks or special
dividends, which have negative implications for credit
investors."
The technology sector continued
to be the most prone to activists, making up 30% of North
American companies targeted since the start of 2015. Other
highly targeted sectors include services, healthcare, and
retail.
The report, "Shareholder
Activism 2015: Activists are Gaining Momentum," includes an
appendix that provides a comprehensive look at rated companies
targeted by activist shareholders in 2014 and so far this
year.
Moody's research subscribers
can access the full report at:
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_180371
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This publication does not
announce a credit rating action. For any credit ratings
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Chris Plath
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
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Tom Marshella
MD-US and Amer Corporate Fin
Corporate Finance Group
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