In May 2016, oil and gas giant Total SA (TOT) agreed to acquire French high-performance battery maker Saft SAS in a $1.1 billion deal.

Behind the scenes, the transaction emerged after years of activist involvement from Luxembourg-based Sterling Strategic Value Fund that began in 2013.

“We had come to the realization that the company really needed to be part of a consolidation process,”  Sterling Strategic Value Fund director Giulia Nobili told participants at The Deal’s 2020 Corporate Governance London conference. “We asked the chairman to do a strategic review of the business. The chairman agreed to do it.”

Nobili joined proxy solicitor Cas Sydorowitz of Georgeson LLC and John Armstrong Denby, a former activist investor, on a panel about how most activism takes place privately, without the use of public insurgency tactics and director contests.

“Activism usually starts behind the scenes,” Sydorowitz said. “It is about fact finding. An activist has done an inordinate amount of research before they pick up the phone to meet someone. They are testing their models and looking for validation. They are testing the appetite of the management team — Do they [executives and boards] want to engage or are they combative?”

Nobili said Sterling acquired a 3.5% stake in Saft as a result of a profit warning. She said the firm felt Saft had been undermanaged for many years but was an interesting manufacturer of batteries for industrial and military purpose.

“The company had access to markets with high barriers to entry,” Nobili said.

In 2014 the company created two new senior management positions, one focused on innovation and another targeting international expansion, following Sterling’s agitations. The fund later urged Saft to install two board members and reinstate its dividend policy, she said. Following Sterling’s efforts, the company added one director and move to reinstate a dividend policy. Nobili said that later Sterling had come to the realization that Saft should be acquired.

“The chairman started looking for potential buyers and within a few months there was a friendly takeover by Total,” Nobili said.  “All of this was really achieved behind the scenes. We believed that had we been public [with our campaign] our chances of being successful would have been much less, especially considering that a confrontational situation in the French market is not something you want to look for.”

She noted that activists must be professional and employ a lot of diplomacy. “You have to engage with board and senior management on topics to convince them to go in the direction you want,” Nobili said.

Editor’s note: The original version of this article was published earlier on The Deal’s premium subscription website. For access, log in to TheDeal.com or request a free trial.