Activism Reshaping Global M&A

What you need to know

• Record-breaking activism: Shareholder activism reached record highs in the first half of 2026, with 392 activist campaigns launched globally. The US and APAC dominated at a regional level, with 40% of these campaigns involving an explicit M&A thesis.
• Preparation is paramount: With activist M&A campaigns expected to grow in volume and reach for the remainder of 2026 and into 2027, advance preparation of defence strategies and proactive shareholder engagement are key focus areas for boards.
  
• Institutional investors find their voice: Traditional long-only institutional investors are increasingly willing to weigh in on M&A transactions, demand improved deal terms and call for strategic alternatives, signalling that public shareholder pressure is no longer the exclusive domain of dedicated activist funds.

The rise and rise of shareholder activism

Shareholder activism continues to be a material force in the global M&A landscape. It reached record highs in the first half of 2026, with 392 shareholder activist campaigns launched globally, with the US and APAC dominating at a regional level. In recent years, activist investors have increasingly shifted from traditional governance-oriented campaigns toward direct engagement with M&A transactions, seeking to influence deal terms, challenge proposed acquisitions or advocate for strategic alternatives such as divestitures and sales processes. Q4 2025 was the busiest quarter in five years for M&A-related activist campaigns, with M&A featuring in 61% of campaigns and remaining a leading objective in H1 2026, accounting for 40% of campaigns globally.

Shareholder activism as an M&A catalyst

The following recent examples demonstrate the range of tactics activists are employing to compel boards to pursue strategic alternatives, from full sales to portfolio break-ups.

Ancora Alternatives built a significant stake in Ashland, a US specialty chemicals company, and in June 2026, publicly pushed for a full sale, arguing that a transaction could boost the share price by approximately 30%. A second activist, Cruiser Capital, similarly urged Ashland to explore a sale. The campaigns resulted in Ashland appointing two new directors and establishing a capital allocation committee. Recent reports suggest Ashland is now exploring a potential sale after receiving takeover interest. The Ashland campaigns exemplify the typical activist M&A catalyst model: identifying a valuation disconnect, building a stake, and publicly calling for the board to pursue strategic alternatives.

Across the Atlantic, the UK, which is often regarded as operating a legal and regulatory framework that provides a benign environment for shareholder activism, has remained a fertile hunting ground for activists. Most notably, there have been sustained campaigns by Saba Capital against various UK investment trusts since 2024, whilst a number of commercial companies, such as bp, Rio Tinto and Whitbread, have also been on the receiving end of public campaigns in the last 12 to 18 months. Agitating for M&A remains high up on the list of demands with a relevant example being Engine Capital's public calls in 2025 for Smiths Group, a FTSE 100 engineering conglomerate, to pursue a sale or break-up to maximize shareholder value. Shortly following Engine Capital's public letter, Smiths Group announced a full break-up of its portfolio, including the divestment of two major businesses (sales for which were agreed in H1 2026 for a combined enterprise value of £3.3 billion) and a £500 million share buyback program. Engine Capital held only 2% in a company with a market capitalisation of £7.6 billion, and the timing suggests that Smiths had been considering the strategy for some time before the public letter. That said, the outcome highlights the significance a persuasive conglomerate discount thesis can have in modern shareholder activism.

In the APAC region, in June 2026, Elliott Investment Management built an approximate 5.6% stake (valued at A$1 billion) in Northern Star, Australia's largest gold miner, and publicly called for a strategic review covering all options, including a full or partial sale, and a comprehensive board refresh. Although the headline demand for a sale was rejected, Elliott's campaign resulted in a fundamental reshaping of Northern Star's leadership, board composition, and strategic oversight. Whether these changes translate into M&A activity remains to be seen, but the campaign illustrates that an activist's call for a sale, even one that is formally rejected, can exert transformative pressure on a public company. Notably, in September 2026, Gold Fields made an unsolicited, non-binding indicative proposal to acquire Northern Star for an implied equity value of A$38.7 billion, which the Northern Star board rejected as opportunistic and materially undervaluing the company.

Institutional investors and activism

Traditional long-only institutional investors are increasingly willing to weigh in on M&A transactions, demand improved deal terms and call for strategic alternatives, signalling that public shareholder pressure is no longer the exclusive domain of dedicated activist funds.

The James Hardie / AZEK transaction brought this trend into sharp focus. James Hardie (listed in Australia) announced its proposed acquisition of AZEK in March 2025, involving the issuance of shares equal to approximately 35% of its existing share capital. This prompted an open letter to the ASX from some of Australia's largest investors, including Allan Gray and several major superannuation funds, arguing that shareholders should have a vote on transactions that involved shareholder dilution. The consequences were significant: the ASX launched a consultation proposing to lower the "reverse takeover" threshold from 100% to 25% for larger listed entities, and James Hardie's shareholders subsequently voted to remove the Chair and two directors at the company's AGM. This underscores that when traditional long-only investors are prepared to publicly oppose transactions and exercise their governance rights, it fundamentally changes the dynamics boards must navigate in pursuing M&A. (For a detailed analysis, see Ashurst Perkins Coie's article "Wait AZEK – is this too much change?")

Response and preparedness

Being prepared to respond to any activist campaign essentially comes down to what effective boards will be doing in any case – regularly assessing strategic opportunities with a view to establishing what is in the best interests of shareholders as a whole. That said, a structured approach to assessing vulnerabilities across key areas that may be targeted by shareholders including strategic direction, governance, board effectiveness, financial performance, capital allocation and investor communications can be beneficial for boards to be better prepared to respond to an activist campaign. 

Proactive and regular engagement with institutional shareholders is a critical component of this. Ongoing dialogue ensures investors have a clear understanding of the company's strategy and long-term value proposition, while also keeping the board attuned to emerging shareholder concerns. Regular communications with institutional shareholders and investors can strengthen board credibility and reduce the risk of an activist narrative gaining traction.

Where activism drives or influences M&A activity, regard should be had to how transaction terms may be impacted by activist activity. So-called "bumpitrage", the intervention of a shareholder activist in a public bid to attempt to force the bidder into improving the financial terms of the bid, has become increasingly prevalent in the UK, while other terms that may be impacted include break fees, ticking fees, cost-reimbursement provisions and clearly defined conditions precedent, to mitigate shareholder exposure in the event a transaction is delayed, restructured, or fails to complete.