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ANALYSIS: Tech Investor Activists Target Supply Chain in Q2

July 6, 2022, 9:00 AM

The global investor activism campaign count across all industry sectors in the last quarter was on par with recent quarters. But investor activists have shifted their focus away from industrials to technology in Q2.

Past activist investor campaigns aimed at the technology sector were less aggressive due to the highly specialized nature of the sector. But continued supply chain constraints may have pushed activist investors to craft campaigns targeting technology companies’ adaptability to supply chain disruptions, rather than specialized technological developments.

Investor Activism Campaigns Remain Steady

The global Q2 investor activism campaign count (147) was comparable to the past five quarters, which amassed between 134 and 165 investor activism campaigns.

In Q2, investor activists launched the most campaigns in the technology sector (23), with industrials coming in at 20 campaigns.

Technology Sector Targets Supply Chain

Technology sector investor activists focused their campaigns on the technology hardware industry in Q2, considerably increasing the number of campaigns launched from two (Q1) to ten (Q2).

The rise in campaign count may be linked to global chip shortages—at least two technology hardware investor activist campaigns in Q2 explicitly sought a sale or acquisition of the target company based on chip-related factors. Investor activist Aviat Networks Inc. is pushing for an acquisition of Ceragon Networks, partially based on the company’s delayed chip development. And investor activist Elliott Investment Management LP has leveraged a campaign against Western Digital Corp., seeking a sale or spinoff of the company’s flash memory chip operations.

Other campaigns leveraged against the technology hardware industry sought board control or representation in Q2. These activist campaigns could signal that investors are pushing back on how companies address sudden supply chain constraints.

Investor Activists Remain Adaptable

The technology sector won’t be alone in facing supply-chain-related activist challenges. Across all sectors, investor activists will adapt to supply chain issues, and craft targeted campaigns.

As we move into the next quarter, we should keep an eye on activism in the consumer discretionary sector as global supply chain constraints continue and investors experience record losses.

Bloomberg Law subscribers can find related content on our ESG Practice page, as well as our Practical Guidance: Shareholders page.

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