Global consolidation and shareholder activism – does scale matter and how to drive long-term shareholder value by taking an activist lens on the business? (pdf)
The last year was a banner year for M&A in medical technology. Accelerating the med-tech consolidation trend were three of the largest six deals ever announced: Medtronic & Covidien, at $43 billion; Zimmer & Biomet, $13 billion; and Becton Dickinson & CareFusion, $12 billion. While it is not clear that scale across multiple product segments has correlated with corporate performance in the past, the jury is out how such deals and scale advantages will materialize in the future. With a backdrop of industry growth being more muted than historically, game changing innovation becoming harder to come by, price pressures having intensified across many large segments and rapidly changing customer buying behaviours, will the same be true in the future?
On top of the corporate-driven M&A agenda, we are seeing increased activism among shareholders. The current generation of activist investors has moved beyond traditional targets of smaller, badly performing companies, challenging some of the largest and historically most successful enterprises. The impact of these investors is magnified by actions of large, non-activist shareholders which urging executives and boards to take an activist lens to the business and fix vulnerabilities in performance, health, and governance.