Vodafone boss Nick Read sought to defend his track record after the mobile giant became the latest FTSE 100 firm to be targeted by an activist investor.
With analysts branding British stocks some of the cheapest in the world, a dozen blue-chip groups worth almost £500billion are being targeted by shareholders agitating for change.
Delivering Vodafone’s third-quarter results yesterday, Read said he was working on merger and takeover deals ‘at pace’ to quell criticism from Swedish group Cevian.
Under fire: Vodafone boss Nick Read (pictured) sought to defend his track record claiming he was working on merger and takeover deals ‘at pace’
Read pointed out that he has completed 19 transactions since becoming chief executive in 2018. He also promised to return more money to investors, often a key demand.
The size of Cevian’s stake is unknown. It has been reported to be pushing for changes, such as restructuring the portfolio and refreshing the board, to draw a line under years of a lagging share price.
Names such as Glaxosmithkline (GSK), Shell, Unilever and Glencore have also been under the cosh.
Sarah Ketterer, chief executive of Rolls-Royce agitator Causeway Capital Management, said: ‘The UK is a bargain basement compared to the US, where there’s too much money chasing too few deals.’
She said there was a ‘confluence of undervalued companies and good corporate governance’ meaning that ‘with the right amount of persuasion, companies will do what they need to do to reward shareholders’.
Cevian, whose managing partner Christer Gardell has earned the nickname ‘The Butcher’ in Sweden, has already been pushing for change at London-listed firms Pearson and Aviva.
When it bought into Pearson in 2020 it demanded a say in the appointment of the next chief, who came in the form of former Disney executive Andy Bird.
It is widely thought to be biding its time before pressing for more changes and perhaps a board seat.
Cevian upped its stake in Aviva this month – from 5 per cent to more than 6 per cent – as it calls on boss Amanda Blanc to hand more money to shareholders.
Aviva plans to return at least £4billion.Cevian wants £5billion, and at least £500million in savings by 2023.
At Elliott Advisors, led by Paul Singer, seen by many as the most feared activist in the US, the aggression is more apparent.
Like Cevian, Elliott has trained its sights on major UK companies – GSK, Taylor Wimpey and SSE.
The hedge fund wants GSK chief executive Emma Walmsley to reapply for her job when the consumer division, which makes Sensodyne toothpaste and Panadol pain relief, splits off from the pharmaceuticals business next year.
Swedish investment group Cevian has bought an undisclosed stake in FTSE100 mobile giant Vodafone
At Taylor Wimpey, it is telling shareholders it would back ex-Persimmon boss Dave Jenkinson to replace Peter Redfern, who quit soon after Elliott’s involvement was disclosed.
Rolls-Royce has come under similar pressure from Causeway, based in California.
Portfolio manager Jonathan Eng last year said the board ‘needs some fresh thinking’, urging chairman Anita Frew to take a close look at the engine-maker’s top team. She has started drawing up a list of possible replacements for chief executive Warren East.
The London targets in energy and resources, on the other hand, have all have been subjected to calls to break up their businesses at a time when the world is trying to go green.
Elliott, for example, believes SSE should add two board members and separate out its renewable arm, a call the company has flatly refused. Another US titan, Daniel Loeb’s Third Point hedge fund, has urged Shell to split out its renewables business too.
But Shell boss Ben van Beurden argues that it will only afford huge investments in new energy technologies by generating oil and gas profits.
Activist Bluebell Capital, meanwhile, has told Glencore to separate its thermal coal business – as mining firms are under pressure to go green. This has so far been rebuffed.
Others companies have seen major shareholders build up stakes without yet making demands. At consumer goods giant Unilever, the move by Nelson Peltz’s Trian Partners is said to have so far only resulted in a single meeting with boss Alan Jope.
However, Peltz may not stay on the sidelines for long, amid criticism over Unilever’s ‘woke’ agenda and doubts over Jope following a botched £50billion bid for GSK’s consumer arm.
French tycoon Patrick Drahi has built up an almost 18 per cent stake in BT through his firm Altice. The City is on tenterhooks to see if he makes a full-blown offer. If not, he is widely expected to instruct boss Philip Jansen to make changes.
And Sainsbury’s has its own activist – the ‘Czech Sphinx’ Daniel Kretinsky. His Vesa Equity has a 10 per cent holding and all is quiet, for now.
But it would be no surprise if there are demands for an overhaul at Sainsbury’s, or even another British company, are still to come.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.