Activist shareholders have been busier and more aggressive than ever in 2015, in a move that may cheer the shareholders of target companies but dismay the owners of their debt.
There were 178 public campaigns in the year through Oct. 15, up from 165 in the same period a year ago, according to a new report from Moody’s. Given that activity typically spikes in the fourth quarter to give activists the lead time needed to prep for a proxy fight at shareholder meetings that take place in spring, the rating agency is expecting 225 to 235 campaigns for the full year. That would beat last year’s record of 222.
“In most instances, this will be credit negative for the targets because of their increased susceptibility to forced changes in strategic direction and/or financial priorities, for instance increasing debt-funded share buybacks,” said Christian Plath, a Moody’s senior credit officer and lead author of the report.