“Australia had its break out year of activism in 2017, with a number of high profile campaigns and increasing financial media coverage of activism. Offshore activists increased their activity in Australia with U.S. activist, Elliott Management, continuing a large scale campaign against minerals giant BHP, Singaporean based billionaire investor Michael Kum targeted local vessel operator MMA Offshore demanding a board overhaul, and U.K. based Metal Tiger targeted mining junior Kingsgate.
The most common source of shareholder activism in Australia remained homegrown activists. Among those new homegrown activists making an impact in 2017 was long-standing leader of Australian retail investing, Solomon Lew, campaigning for board representation at Myer the department store, whilst prominent local investor Gary Weiss campaigned to be appointed as chairman of entertainment operator Ardent Leisure.
2018 promises to again be active, with a mix of foreign and home-grown activists while large campaigns at BHP and Myer are unlikely to have seen their final chapter.”
Shane Murphy, Senior Director
Country:
Australia
Average % of insider ownership:
Activism
Threat Level
To learn more about this country, please click on the tabs below
Australia is one of the top ranked counties for shareholder activism risk level trailing only the United States. Australia’s climb in risk levels has been extremely rapid and shows little signs of abating. The Australian legal framework is mildly favorable to activist investors and provides for similar investment strategies as those seen in the United States.
Shareholders reaching or exceeding a five percent threshold and each whole percentage point after that must disclose their voting interests.
While shareholders have rights to propose resolutions, the board does not need to put resolutions forward that concern management matters, unless specifically allowed for in the company’s constitution. Activists, therefore, need to frame a resolution as an amendment to the company's constitution to enable a binding vote on a management matter.
The Corporations Act states that certain kinds of collective action by shareholders, such as formulating joint proposals or agreeing to vote in a certain way, may be deemed to be “associated” by acting in concert. If more than 20 percent of the shares on issue are deemed to be associated, it may violate the 20 percent rule, which forbids outright voting power greater than 20 percent except via a specified exception.
Although poison pills are not permitted, a change of control provision in an appropriately drafted loan agreement (poison pill loan), key supply or customer contract or other business critical agreement can have a similar effect of discouraging hostile takeovers or shareholder activism. Company directors would need to be mindful of their duties to shareholders in formulating these agreements. This tactic was successful in fending off a recent activism campaign against Bellamy’s – a key supplier contract contained a change of control provision.
Top Campaigns by Type
1. Removal of CEO or Other Board Member
2. Gain Board Representation
3. Sell/Retain Assets
Campaigns By Year
Total
Campaigns
Notable Invested Activists
• Elliott Management
• Petrus Advisers
• Premier Investments
Recent activism campaigns
| BHP Billiton | VS. |
Elliott Management |
| Ardent Leisure Group | VS. |
Ariadne Australia Limited |
| Anteo Diagnostics | VS. |
First Cape Management Pty. Limited |
Total Active
Campaigns
Contact FTI Consulting
Senior Managing Director
+65 68 31 7851
Paul.Downie@FTIConsulting.com
Senior Director
+61 8 9485 8804
Shane.Murphy@FTIConsulting.com