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Source: Moody's Investor Service, April 9, 2015 announcement


 

Announcement: Moody's: Activist shareholders gain momentum in 2015; mainly negative for credit investors

 

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

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Chris Plath
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Tom Marshella
MD-US and Amer Corporate Fin
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653


 

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