Morrow Sodali: Retail shareholder is increasingly important for the success of takeover bids

Retail investors have become increasingly important for the success of takeover bids, according to Morrow Sodali, the global consultancy that was engaged in 32 out of the 50 deals held between 2020 and 2022.

“It seems that around 5-6 months ago, the vast majority of companies launching a takeover bid were forced to raise the initial price. But this is changing,” comments Andrea Di Segni, Senior Managing Director of Morrow Sodali, in the article by Milano Finanza.

“The real change that has been happening for at least three years, regards the presence and activism of the retail during takeover bids,” adds Di Segni. “They're technically retail investors, but they have experience and financial literacy, and often also have good economic availability.”

“Essentially, they have started doing what the hedge funds or arbitrageurs used to do. They buy the day that the takeover bid is launched. At the beginning, this particular class of investors bets on the aforementioned raises, but in general, for offers that have high thresholds to be reached, they risk being decisive,” remarks Di Segni.

We may say that if retail weighs more than 5% and reaches 8% or even 10%, it becomes what in finance is called a “deal breaker”. In this sense, engagement becomes an important activity. This would also be the case in the event of a possible TIM public offer, an operation which the market is now strongly betting on.

Read the full article here.