Activist investors’ growing appetite for corporate change

More investors than ever are adopting an activist playbook and their appetite shows no signs of waning.

Once criticised as enfants terribles seeking short-term gains at the expense of a target company's longer-term interests, activists last year saw first-timers grow by a third and broke records in terms of numbers of companies and regions affected.

In this animated video, the FT’s Arash Massoudi explains these investors' strategy and the collateral damage they can cause.

Activists such as Elliott Management’s Paul Singer and Nelson Peltz of Trian Partners buy companies’ stakes and use them to lobby for change, aiming to increase the target's share price. In 2018, activists won the largest number of seats at public companies ever.

But investor activism is no longer a US prerogative. A third of all campaigns last year were initiated in Europe and Asia Pacific.

This boom, Massoudi warns, is only the beginning.

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Big pharma’s billion-dollar bets

As patents lapse and funding on R&D is cut, big pharma is spending big money on risky takeovers to find the next blockbuster drug. In this animated film, Due Diligence's Arash Massoudi explains how Bristol-Myers Squibb’s $90bn takeover of Celgene has set the stage for more to come in 2019.

As investors have exerted pressure on big pharma to cut back spending on research and development that can result in expensive disappointments, incumbents have been acquiring smaller competitors to replenish drug pipelines.

Nimble start-ups, in contrast, are not weighed down by legacy businesses and can focus on innovation. Many fail but those that succeed, or even show promise by producing just one drug, instantly become takeover targets.

Underpinning these acquisitions is a gamble. Should a big company buy a start-up that has potential but has not proven its worth? Or wait and miss out on a short cut to high returns and new products?

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