FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
ations, buyers and sellers have become more cautious, leading to more detailed and heavily negotiated adjustment mechanisms in the trans - actional documentation.
Activists are no longer merely pressuring boards through voting campaigns; they are increasingly turning to legal action to protect investor rights. Activist campaigns are often supported by proxy advisory firms, whose influence on institutional investors plays a crucial role in contested share - holder votes. As a result, companies are increas - ingly engaging in proactive dialogue with their shareholders to anticipate and mitigate activist demands. 11.2 Aims of Activists In France, shareholder activists often aim at driv - ing significant strategic and financial changes within target companies. Their objectives typically include encouraging companies to enter into M&A transactions, spin- offs or major divestitures to unlock shareholder value. Activists frequently push for the sale of underperforming assets, restructuring efforts or mergers they believe will generate higher returns. Beyond transactional aims, activists also advo - cate for changes in capital allocation policies, such as increasing dividends, share buybacks, or optimising debt structures. In some cases, they call for board reshuffles or changes in exec - utive leadership to improve corporate govern - ance and operational efficiency. A recent example from 2024 is the case of Viv - endi, one of France’s largest media conglom - erates. Under pressure from investors, Vivendi announced a plan to spin off into four separately listed companies negatively affecting its stock valuation. This move was aligned with activist strategies, as breaking up large, diversified busi - nesses often unlocks greater shareholder value by allowing individual units to be valued inde - pendently by the market.
11. Activism 11.1 Shareholder Activism
Shareholder activism has become an increasing - ly prominent force in the French M&A landscape over the last few years, driven by a combination of evolving corporate governance standards and a push for greater shareholder value. Activist investors, including hedge funds and institutional shareholders, have grown more assertive in influencing strategic decisions, par - ticularly in sectors like energy, financial servic - es and consumer goods. In recent years, they have also pushed for greater accountability on environmental matters, advocating for “Say on Climate” votes to influence corporate climate strategies and disclosures. For example, shareholder activism had a huge impact on the restructuring of Atos, a French IT services company facing severe financial dif - ficulties. As part of this plan, Atos announced a significant reduction in its debt while forcing existing shareholders to either invest additional capital or face massive dilution of their holdings. In response, a group of Atos shareholders formed an association that initiated legal proceedings against Atos, arguing that the company’s finan - cial restructuring unfairly disadvantaged minority shareholders. The legal strategy aimed at hold - ing Atos accountable for decisions that allegedly misled investors and caused significant financial harm and the association sought compensation for shareholders who had seen their investments eroded by the company’s mismanagement.
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