4/3/2025

House Financial Services Republicans Commend SEC for Rescinding Proxy Rule

Financial Regulation News (04/03/25) Kovaleski, Dave

Republicans that serve on the House Financial Services Committee commended the Securities and Exchange Commission (SEC) for its recent decision to rescind Staff Legal Bulletin (SLB) No. 14L. Staff Legal Bulletin (SLB) No. 14L was put in place back in 2021 to provide guidance on shareholder proposals. Along with looking at the impact on business operations, the bulletin also encouraged proposals to include the broader social impact. “The SEC’s core mission is to protect investors, maintain fair and efficient markets, and facilitate capital formation. The recent rescission of SLB 14L is a commendable action aligned with this mission,” the House Financial Services Republicans wrote in a letter to acting SEC Chair Mark Uyeda. “We encourage the Commission to build upon this progress by pursuing further reforms to Rule 14a-8 that will promote a shareholder proposal process that is both fair and focused on enhancing long-term shareholder value.” The letter was signed by Committee Chairman Rep. French Hill (R-AR), along with Rep. Ann Wagner (R-MO), chair of the Subcommittee on Capital Markets, and all Republican members of the Subcommittee on Capital Markets. “However, despite this positive development, challenges remain within the Rule 14a-8 framework. The politicization of the proxy process continues to place a substantial burden on public companies, drive up unnecessary costs for shareholders, and undermine the broader attractiveness of U.S. public markets,” they wrote. “When shareholder proposals are driven by social and political agendas rather than issues directly tied to corporate performance, they erode investor confidence and divert resources away from long-term value creation. This not only harms the companies targeted but also retail investors, pension funds, and other market participants who rely on fair and efficient capital markets.” The lawmakers urged the SEC to undertake a formal rulemaking to restore the shareholder proposal rule’s original intent by keeping politics out of proxy statements; eliminate the significant policy exception; increase resubmission thresholds; enhance oversight of proxy advisory firms; and end robovoting practices. “The SEC’s recent actions are a step in the right direction, but the Commission must build on this momentum by implementing durable, substantive reforms through formal rulemaking. Ensuring that the proxy process serves the interests of all shareholders—not just a vocal minority with political agendas—is critical to maintaining the integrity and competitiveness of U.S. capital markets and supporting long-term value creation. Political debates should be left to Congress, not corporate proxy statements,” they added.

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4/3/2025

Shareholder Activists Dial Back on Resolutions

Reuters (04/03/25) Kerber, Ross

Sustainability-minded shareholder activists filed fewer resolutions for corporate annual meetings this year, but battles still loom on topics like corporate diversity efforts. Investors pressing companies on environmental, social and governance (ESG) matters filed a total of 355 shareholder proposals as of Feb 21, down from 536 of them filed at the same point in 2024 and 542 filed at the same point in 2023, according to a new report from shareholder activist group As You Sow. Activists cited a number of reasons for the decline including a sense that big investors would not support their measures, and concerns that Republican regulators might not let their resolutions go to a vote in the first place. Another factor: companies are wary of public battles and have seemed willing to make changes to avoid unwanted attention, said Andrew Behar, As You Sow's CEO. "Companies were more willing to have things not escalate," he said in an interview, confirming his sense of things from February. Behar said his group also decided not to file some resolutions seeking more specific DEI data from companies, lest the measures expose the firms to possible retaliation by U.S. President Donald Trump's administration. He has targeted corporate DEI policies. "We own the companies, we don't want them to fail," Behar said. "If we're engaging a co and they have a good business reason to say that right now they can't give us what we're asking for, then we're not going to ask for it," he said. It's not like the pro-ESG activists are giving up, however. As You Sow's report flagged a number of resolutions filed at companies that had dialed back their diversity, equity and inclusion efforts last year. At Ford (F), for instance, Mercy Investment Services called on the board to report on the research and analysis it did before changing its DEI policies last summer. Maxwell Homans, Mercy shareholder advocacy associate, said via e-mail that "As investors, we wanted clarity on these changes and on the decision process, such as research into the business case for these changes and whether employees and stakeholders were consulted before implementing them. We believe stakeholders, including their consumers/the public, also have the right to know." Ford in its proxy recommended votes against the proposal, saying it had made only common sense changes such as revamping its employee resource groups. "Ford remains committed to operating in ways that best serve our diverse customers and the diverse communities where we live and work," the automaker said in its proxy. "Given that our values and core practices remain unwavering, and that we believe our existing disclosures are responsive to our investors’ core areas of interest, the Board of Directors does not believe that preparing the requested report on the Company’s DEI strategy beyond what the Company already reports is an effective use of Company resources at this time," Ford said.

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4/2/2025

Activist Shareholders Drive Corporate Governance Reforms in South Korea

Business Korea (04/02/25) Choi, Jasmine

A recent wave of shareholder activism has significantly impacted corporate governance in South Korean companies, marking a shift in power dynamics between small shareholders and traditional family management. As the March regular general shareholders' meeting season concludes, individuals recommended by small shareholder alliances and activist funds have joined the boards of various listed companies, signaling a growing demand for improved shareholder returns and corporate accountability. According to the Korea Exchange on April 1, the stock price of KOSDAQ-listed HPO closed at 2,455 won, up 2.29% from the previous trading day. The health functional food specialist, known for "Denmark Probiotics Story," saw its stock price rebound after seven trading days following the election of an auditor recommended by an activist fund at the shareholders' meeting on March 31. Stride Partners pointed out that HPO's governance structure and poor decision-making led to its sluggish stock performance. Since its listing in May 2021, HPO has never surpassed its public offering price of 10,608 won, and its market capitalization has decreased from 442.6 billion won to 103.3 billion won. Stride Partners demanded the withdrawal of HPO's subsidiary listing plans and recommended attorney Nam Joong-gu as an auditor, which was approved. Stainless steel processing company T-Flex, also listed on KOSDAQ, saw former Vice President Koo Hee-chan, recommended by a small shareholder alliance, appointed as a standing auditor at its shareholders' meeting. This was achieved by securing 56.11% of voting shares through the small shareholder platform Heyholder. On the same day, T-Flex's stock price rose by 1.9% compared to the previous trading day. The law firm Weon, representing the small shareholder alliance, criticized the excessive family management for diminishing the company's value. Of the total seven executives, four, and of the four board members, three are related to the CEO. While the accumulated operating profit over the past five years was 45.3 billion won, the compensation for the CEO and other executives was 9.3 billion won, whereas the total shareholder dividend was only 3 billion won. They plan to normalize corporate value through management transparency. Kolmar Holdings welcomed Lim Seong-yoon, co-CEO of Dalton Investments, as a non-executive director. Although non-executive directors do not participate in management, they attend board meetings to express opinions. Kolmar Holdings decided to listen to diverse shareholder opinions to enhance corporate value. Additionally, individuals recommended through shareholder proposals were elected as outside directors at DI Dongil (Lee Sang-guk) and UXN (Kim Byung-chul, Lee Han-nam). The increasing instances of directors and auditors being appointed through shareholder proposals are due to the growing demands for shareholder returns. With the activation of online shareholder action platforms, cases of small shareholders winning in proxy battles have also increased. According to the Korea Chamber of Commerce and Industry, the average shareholding ratio of small shareholders in 200 listed companies is 47.8%, surpassing that of major shareholders and related parties (37.8%). The stock price of Dentium (145720), a KOSPI-listed company, rose by 11.11% from the previous trading day simply on news that the activist fund Align Partners secured a 7.17% stake. However, there are concerns that the demands of small shareholder alliances or activist funds do not always have a positive impact on companies. As demands for excessive dividends or share buybacks increase, the capacity for long-term investment may decrease. Jeong Dong-hee, a researcher at Samsung Securities, stated, "Dentium's stock price has fallen to the lower end of its historical valuation due to its passive shareholder return policy, so the intervention of activist funds could be an opportunity for a stock price reversal," but also warned, "Until a fundamental performance improvement strategy emerges, stock price volatility may increase."

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3/31/2025

Opinion: Rio Tinto Shareholders Should ‘Trust, But Verify’ Their Board

Bloomberg Opinion (03/31/25) Blas, Javier

Bloomberg Opinion columnist Javier Blas writes, "Rio Tinto (RIO) has a message to its shareholders: Trust us — we know better. Facing an activist investor calling for an end to its dual-listed structure, the mining company wants to preserve its status quo. At the next annual general meetings, shareholders should rebuff the board. Instead of taking the directors at their word, shareholders should adopt the Russian proverb that US President Ronald Reagan popularized during the final years of the Cold War against the Soviet Union: 'Trust, but verify.'" Blas says "the best way to verify whether the board is right is to support the activist’s resolution, pressing for an independent review. The board believes this appraisal would be 'highly duplicative and unnecessary' because it conducted its own in 2024, which — it says — found no reason for change. 'There is no basis for expecting that an additional review, including an independent expert report, would lead to a different conclusion,' the board has told shareholders. It added that Rio Tinto would probably lose money due to taxation rules if it ended its current structure. Perhaps the directors are right, but then there’s truly little risk, other than a few bruised egos and some trivial costs to hire bankers and lawyers, to allow the independent review. After all, the activist is just asking for one. And the money at stake is so vast that even if there’s a small chance the investor is right, it’s worth the try. Granted, if the review finds that terminating the dual listing would be beneficial, then the board would have a big decision to make: The activist, Palliser Capital, believes that Rio should become a wholly Australian company with a primary listing in Sydney and secondary one in the UK. That would be a massive blow for the London Stock Exchange and its FTSE 100 blue chip index, where Rio is the fifth-largest constituent by market capitalization. The potential end of the dual-class structure of Rio Tinto would be a setback for the UK if it moves its primary listing to Australia." Shareholders have a reason to be suspicious of the board’s reasoning: Other companies with similar dual-listed structures have made similar arguments before. And, ultimately, it became clear that not only was it possible — and easy — to end those archaic arrangements, but over time, a simpler setup was in the interest of investors. Rio Tinto should take the activist seriously. Palliser may not have the reputation of Elliott Investment Management, but some of its top people cut their teeth precisely at the aggressive activist. While the size of its stake in Rio Tinto is trivial, the miner could consider the case of giant Exxon Mobil Corp., which in 2021 was defeated by tiny activist Engine No. 1. Size isn’t what matters — it’s the idea. The starting point is complicated: Rio Tinto today has a convoluted configuration that was created nearly 30 years ago. It’s made up of two listed entities that together form the group. One entity, formally known as Rio Tinto Plc, is incorporated in the UK and listed in London, accounting for about 77% of the shareholders. The other, known formally as Rio Tinto Ltd., is incorporated in Australia and listed in Sydney; it accounts for 23% of the shareholding. The British side holds most of the international assets, like its copper mines in Latin America. The Australian entity holds lucrative iron ore mines. Because of different tax rates on dividends, the London-listed shares trade at a discount to the Australian stock (typically, about 15% to 20%). The review is likely to yield a mixed picture, according to Blas, with neither an unequivocal yes, nor an unambiguous no. "Ending a dual listing involves significant guesses about future tax liabilities and the cost of potential all-share deals. It also involves significant conjecture about what investors in very different geographies would do. The board would need to take a cost-benefit view; not everyone is likely to agree with it. Still, an independent review at least presents a starting point to debate. As such, Palliser’s proposal makes sense. Unsurprisingly, two influential shareholders advisers, ISS and Glass Lewis, also support it. I do have a problem with the proposal, however: It calls for forming a committee composed of Rio Tinto’s 'most recently appointed independent directors' with a 'shareholder representative in attendance.' From a governance perspective, the presence of a shareholder sets a worrying precedent that could, in extremis, create a system of board tutelage for every important decision. Even more importantly, if Palliser were the investor representative, it would be effectively 'judge and jury' on a matter in which the fund isn’t an innocent bystander. Palliser should trust other shareholders to do the job and recuse itself. When I asked the fund about it, the activist said, via a spokesperson, it felt it had no choice but to call for the inclusion of an external shareholder due to Rio Tinto’s opacity. But it indicated it was ready to remove itself from contention: 'We would be open to working more constructively with the company on what form this takes, including having a mutually agreed third-party shareholder.'"

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3/25/2025

Corporate Capital Delaware Is Changing Its Law in Fight Pitting Corporate Insiders vs. Investors

Associated Press (03/25/25) Levy, Marc

Delaware lawmakers put aside protests from major investors and approved fast-tracked legislation Tuesday night that backers say will protect its status as the corporate capital of the world. The bill is headed to Gov. Matt Meyer, a Democrat who met with corporate leaders about their concerns about precedent-setting court decisions governing corporate conflicts of interest and urged lawmakers to quickly pass changes to the law. They did, sending the bill through both chambers within two weeks of its introduction, despite shareholders’ lawyers, consumer groups and pension funds slamming it as a giveaway to billionaires and corporate insiders. The House approved it Tuesday night, 32-7, after a unanimous Senate earlier in March. Delaware’s experienced corporate law courts and their well-developed body of corporate case law have become the go-to destination to settle all sorts of business disputes as the legal home of more than 2 million corporate entities, including two-thirds of Fortune 500 companies. The state also reaps billions of dollars from the activity, making lawmakers nervous that corporations could flee Delaware and undercut a major source of revenue that funds one-third of Delaware’s operating budget. After two hours of debate Tuesday, Rep. Krista Griffith told colleagues that the bill was complex, but the reasons for voting for it were simple: “Protect Delaware’s economy, protect future opportunities for the people in our state. We have the best business court in the nation.” However, an opponent, Rep. Madinah Wilson-Anton — referring to the business courts as Delaware’s “golden goose” — warned that the changes being passed could end up “cooking that golden goose.” A legal challenge is widely expected after Meyer signs the bill. In hearings, lawmakers were warned by corporate lawyers and state officials that businesses were contemplating moving their legal home — a “Dexit,” as it has been dubbed — and that startups are being advised to incorporate elsewhere, such as competitors Nevada or Texas. Corporate leaders complained about a lack of predictability, clarity and fairness, lawmakers were told. Last year, Elon Musk slammed Delaware, saying “Never incorporate your company in the state of Delaware” and instead recommended Nevada or Texas as destinations after a Delaware judge invalidated his landmark compensation package from Tesla (TSLA) worth potentially more than $55 billion. Musk and Tesla are appealing in the state Supreme Court, and Musk’s companies — Tesla, SpaceX and Neuralink — all departed Delaware for Nevada or Texas. The fallout seemed to accelerate in recent weeks when the Wall Street Journal reported that Meta Platforms (META) was considering moving its incorporation to Texas. Meta — run by billionaire chairman and CEO Mark Zuckerberg — didn’t confirm the report. The bill has come under withering criticism that it will tilt the playing field decisively against investors, including pensioners and middle-class savers, and make it harder for them to hold billionaires and corporate insiders accountable for violating their fiduciary duty. In a statement, the Consumer Federation of America said Delaware’s lawmakers “clearly failed to protect investors with the passage of the Billionaire’s Bill.” Opponents argue that the bill overturns decades of court precedents. But its backers say it is only affecting newer precedents, modernizing the law, clarifying gray areas and maintaining balance between corporate officers and shareholders. The bill changes several provisions. One, it gives corporate officers and controlling stockholders more protections in certain conflict-of-interest cases in state courts when fighting shareholder lawsuits. Two, it limits the kind of documents that a company must produce in court cases and makes it harder for stockholders to get access to internal documents or communication that could prove time-consuming and expensive for a company to produce — not to mention, damaging to its case. Institutional investors warn that such a law may prompt them to push corporations that they own to incorporate elsewhere.

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3/24/2025

Opinion: RWE’s Brush with Activism Could Prove Short and Sweet

Financial Times (03/24/25) Thomas, Nathalie

Not all activist campaigns are equally highly charged, notes Lex columnist Nathalie Thomas. Some cage-rattling shareholders launch all-out political campaigns, demanding complete strategic overhauls. Others are defused with relatively minor concessions. "Markus Krebber, chief executive of German utility RWE (RWEG), has a chance to make sure his experience is of the latter type," suggests Thomas. Elliott Management, which has built a near 5% exposure to RWE, on Monday called on Krebber to “significantly increase and accelerate” the utility’s €1.5 billion share buyback to address its “persistent undervaluation.” RWE is one of several European energy companies engaged by the hedge fund; it also has a near 5% stake in BP Plc (BP). "In RWE’s case, this should not be a long drawn-out affair," says Thomas. "Much of what the market disliked about the 127-year-old German company is already on the way to being fixed." For example, the phase out of its legacy coal plants in Germany, planned for 2030, is one step in the right direction, according to Thomas. "These were getting in the way of RWE’s reinvention as a gas-and-renewables electricity generation business, and contributed to its persistent undervaluation." The company's enterprise value is currently 6.1 times forecast 2025 ebitda on FactSet estimates, a discount of roughly 30% compared to a basket of European renewables and utility peers. Another problem is that RWE was slower than many rivals to trim its capital expenditure plans after the tide turned against renewables. It took until last November to initiate a pullback on its target to invest €55 billion in green technologies globally between 2024 and 2030. "If one thing remains up for debate, then, it’s what RWE will do with its surplus cash," Thomas writes. "At its full-year results last week, it clarified that it would slash €10 billion from its investment plans between now and 2030 — roughly 25% of what it had intended to spend — but offered no clarity on when or whether those savings might come back to investors in the form of increased share buybacks." It might just be a question of timing. RWE has already committed €7 billion to capital expenditure this year. There will be more flexibility in how the group can allocate capital from next year, Krebber insisted. RWE also intends to sell some assets, so the eventual amount of cash it has to play with may change. "Once the idea of cash returns takes root in investors’ minds, though, it is hard to dislodge," Thomas concludes. "Krebber could do worse than step up RWE’s buyback plans, at least while he works out how to nip this particular activist campaign in the bud."

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3/19/2025

Delaware’s Status as Corporate Capital Might Be on the Line in a Fight over Shareholder Lawsuits

Associated Press (03/19/25) Levy, Marc

Delaware is trying to protect its status as the corporate capital of the world amid fallout from a judge’s rejection of billionaire Elon Musk’s Tesla (TSLA) compensation package, although critics say fast-tracked legislation will tilt the playing field against investors, including pensioners and middle-class savers. A Delaware House committee was expected to vote Wednesday on the bill, which is backed by Democratic Gov. Matt Meyer who says it’ll ensure the state remains the “premier home for U.S. and global businesses” to incorporate. Backers say it’ll modernize the law and maintain balance between corporate officers and shareholders in a state where the courts, for a century, have settled all sorts of business disputes as the legal home of more than 2 million corporate entities, including two-thirds of Fortune 500 companies. Critics — including institutional investors, pension funds and asset managers — say it’ll lower corporate governance standards, curb shareholder rights and, as a result, limit the ability to hold corporate officers accountable for decisions that violate their fiduciary duty. The bill passed the state Senate unanimously last week. A Delaware judge last year invalidated Musk’s compensation package from Tesla that was potentially worth more than $55 billion. Lawyers for shareholders had sued over the package that Tesla’s board of directors awarded Musk in 2018. Chancellor Kathaleen St. Jude McCormick said it was developed by directors who weren’t independent of Musk and approved by shareholders who had been given misleading and incomplete disclosures in a proxy statement. The ruling bumped Musk out of the top spot on Forbes’ list of wealthiest people, although he has since climbed back up. Musk and Tesla are appealing in the state Supreme Court. But Musk unloaded on Delaware, saying “Never incorporate your company in the state of Delaware” and instead recommended competitors Nevada or Texas as destinations. Now, lawmakers are being warned by corporate lawyers that their clients are considering heading to the exits — making a “Dexit,” as it’s been dubbed — and that startups are being advised to incorporate elsewhere. Must took his own advice, moving Tesla’s corporate listing to Texas after a shareholder vote and his companies SpaceX to Texas and Neuralink to Nevada. Backers of the bill say corporate unrest had been simmering the past couple years over various Delaware Supreme Court decisions in corporate conflict-of-interest cases and that Musk inflamed the discontent. The fallout seemed to accelerate in recent weeks when the Wall Street Journal reported that Meta Platforms (META) — the parent company of social media platforms Facebook, Instagram and WhatsApp — was considering moving its incorporation to Texas. Meta didn’t confirm the report. DropBox (DBX), the online file-sharing platform, moved its corporate listing to Nevada, and Bill Ackman, founder of Pershing Square Capital Management, a major hedge fund, said he’d leave Delaware, too.

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3/19/2025

Opinion: Shell Might be BP and UK Government’s White Knight

Reuters (03/19/25) Bousso, Ron

In this new era of energy nationalism, the British government will want to keep an oil and gas company like BP Plc (BP) based in the country, but it may ultimately need the help of another UK energy giant to do so. London-based BP is currently in dire straits, struggling to get back on its feet following a flawed attempt to veer away from fossil fuels to renewables. BP shares have sharply underperformed peers since 2020, and investors appear unconvinced by CEO Murray Auchincloss' fossil fuel-focused strategy reset, opens in late February, judging by the shares. Things got more difficult when Elliott Management built a 5% stake in BP in recent months. The fund is reportedly pushing for further changes, from a shake-up of the board to deeper asset sales and spending cuts. Meanwhile, rumors have swirled in the industry and across financial media about other companies that may seek to acquire BP as part of their growth strategies. The financial logic behind an acquisition by a U.S. rival or a Gulf national oil company is clear. For all of BP's current struggles, the company has a strong portfolio of oil and gas assets, including in the U.S. onshore shale basins and the Gulf of Mexico, Brazil, the North Sea and the Middle East. It also has a leading trading business and well known retail brand. It produced 2.36 million barrels of oil equivalent per day last year, generating $8.9 billion in net profit. This large global footprint makes BP a valuable asset for Britain. Western liberal democracies that do not have state-controlled energy or infrastructure champions must rely on close cooperation with private sector companies to further their national interests around the world. BP helps the UK do just that. This soft power was recently on display when British Prime Minister Keir Starmer highlighted, opens BP's agreement with Iraq to invest billions in new oil, gas, power and renewables projects in the country following a meeting with his Iraqi counterpart Mohammed al-Sudani in London. The UK government will be loath to lose such influence by letting BP be snapped up by a foreign rival. Moreover, energy security is now, perhaps more than ever, a key element of national security. Russia's invasion of Ukraine in 2022 led to a surge in European power prices and disrupted global energy flows, putting a harsh spotlight on the importance of having access to abundant sources of energy and large domestic operators. European governments have since slowed their energy transition plans and are reconsidering the importance of domestic oil and gas production. The need for a strong national energy policy is especially important following Donald Trump’s return to the White House. His administration’s transactional, strong-arm approach to diplomacy has involved pressuring countries to make large-scale investments, such as oil and gas projects. Trump himself took a swipe at Britain’s energy policy, urging the UK to “open up” the North Sea to oil and gas exploration and scrap wind farms. And BP is a major investor in the United States. It directed around 40% of its $16.3 billion capital expenditure in 2024 to the U.S., where it produces around a third of its oil and gas, has two refineries and is a major buyer of U.S. liquefied natural gas. The UK won’t want to lose this leverage. While the British government will not be able to prevent other companies from putting forward bids for BP, it does have the power to block any such deal on energy security grounds under the National Security Investment Act. But it will be hard for the government to fight market forces for long if BP remains in a weak financial position. The obvious solution would be to encourage Shell (SHEL), the other British energy giant which moved its headquarters from The Hague to London in 2022, to step in and acquire BP. Such a combination could enable the UK to retain many of the industrial, financial and national security benefits BP brings. On paper, Shell, with a market cap of around $210 billion, should have no problems acquiring its smaller $90 billion rival. A combination would take years, however, and is bound to face tough anti-trust hurdles in many countries, first and foremost in the United States, where both companies have a large footprint. Shell would probably need to sell some assets to avoid overlaps between the two businesses. There’s just one problem: Shell likely has little interest in such a deal. A mega-merger of this scale does not align with the ethos of CEO Wael Sawan, who is focused on cutting costs and narrowing the business’s focus to liquefied natural gas and trading. But in this new era of growing nationalism and industrial policy a call from 10 Downing Street might be coming soon.

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3/18/2025

Goldman, McKinsey See Quest for European Champions Driving M&A

Bloomberg (03/18/25) Nair, Dinesh

Europe could emerge as a rare bright spot in global M&A, as geopolitical tensions with the US and trade tariffs propel companies in the continent to consolidate, according to some of the region’s top advisers. Market volatility induced by White House rhetoric has dampened optimism among bankers that were expecting a banner 2025, and the volume of global mergers and acquisitions has fallen 8% this year, according to data compiled by Bloomberg. However, there are reasons for less pessimism in Europe, senior executives at Goldman Sachs Group Inc. and consulting firm McKinsey & Co., said on the sidelines of their M&A conference in London last week. “This could be the moment for Europe to pick up momentum,” Andre Kelleners, Goldman’s co-head of investment banking in Europe, the Middle East and Africa, said in an interview. “The implications of what is happening geopolitically, with the U.S. retrenching, could have a positive impact for the region.” Global M&A volume could rise another 10% to 15% this year, mostly driven by corporate activity, with a significant uptick likely in the later part of the year, Woehrn said. Companies are still keen to grow through acquisitions in the longer term, said Michael Birshan, who co-leads McKinsey’s strategy and corporate finance business globally. Around two-thirds of the senior executives polled by the consulting firm expects to do more M&A this year than in 2024, he said. “The mood is still optimistic to dealmaking,” Birshan said. Some of the factors that were hindering dealmaking — such as rising interest rates — have improved in recent months, according to Mieke Van Oostende, who co-leads McKinsey’s M&A practice globally. “Unpredictability and the fact that in 48 hours we can go from one extreme to another and vice versa does not help activity,” she said. “Yet, history tells us this pause will hopefully not last for long. Uncertainty in M&A has become the new normal.” Corporate breakups are also driving one of the biggest M&A trends in globally, a trend that’s been exacerbated by activist investors. Last year, there were 39 separation announcements globally, a 30% increase over the five-year average, according to a presentation to clients by Goldman Sachs at the London conference. More than half of the separations happened outside the US, with Europe leading the way. Activists are deploying billions of dollars into single campaigns, said Avinash Mehrotra, global head of activism and co-head of Americas M&A at Goldman Sachs. An increased proliferation of newly launched funds, which are mostly spinoffs from more established players, is further fueling activity, he added. Elliott Investment Management in the past year has launched campaigns at major companies such as BP Plc (BP) and Honeywell International Inc. (HON). The latter agreed to split into separate publicly traded companies following pressure from the activist. BP has pledged to divest its $10 billion Castrol business and shrink investments in renewables but Elliott has said that strategy fell short of its expectations. “Already this year, activists are becoming more aggressive,” Mehrotra said. “These funds are not going to easily retreat from campaigns.”

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