Mar
23
2020
--

Activist investor Starboard Value taking three Box board seats as involvement deepens

When activist investors Starboard Value took a 7.5% stake in Box last September, there was reasonable speculation that it would begin to try and push an agenda, as activist investors tend to do. While the firm has been quiet to this point, today Box announced that Starboard was adding three members to the 9 member Box board.

At the same time, two long-time Box investors and allies, Rory O’Driscoll from Scale Venture Partners and Josh Stein from Threshold Ventures (formerly from DFJ), will be retiring from the board and not seeking re-election at the annual stockholder’s meeting in June.

O’Driscoll involvement with the company dates back a decade, and Stein has been with the company for 14 years and has been a big supporter from almost the beginning of the company.

For starters, Jack Lazar, whose credentials including being chief financial officer at GoPro and Atheros Communications, is joining the board immediately. A second new board member from a list to be agreed upon by Box and Starboard will also be joining immediately.

Finally, a third member will be selected by the newly constituted board in June, giving Starboard three friendly votes and the ability to push the Box agenda in a significant way.

While this was obviously influenced by Starboard’s activist approach, a person close to the situation stressed that it was a highly collaborative effort between the two organizations, and also indicated that there was general agreement that it was time to bring in new perspectives to the board. The end goal for all concerned is to raise the stock value, and do this against the current bleak economic backdrop.

At the time it announced it was taking a stake in Box, Starboard telegraphed that it could be doing something like this. Here’s what it had to say in its filing at the time:

“Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board of Directors of the Issuer, engaging in discussions with stockholders of the Issuer or other third parties about the Issuer and the [Starboard’s] investment, including potential business combinations or dispositions involving the Issuer or certain of its businesses, making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including board composition), potential business combinations or dispositions involving the Issuer or certain of its businesses, or suggestions for improving the Issuer’s financial and/or operational performance, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares…”

Box CEO Aaron Levie appeared at TechCrunch Sessions: Enterprise, the week this news about Starboard broke, and he was careful in how he discussed a possible relationship with the firm. “Well, I think in their statement actually they really just identified that they think there’s upside in the stock. It’s still very early in the conversations and process, but again we’re super collaborative in these types of situations. We want to work with all of our investors, and I think that’ll be the same here,” Levie told us at the time.

Now the company has no choice but to work more collaboratively with Starboard as it takes a much more meaningful role on the company board. What impact this will have in the long run is hard to say, but surely significant changes are likely on the way.

Apr
02
2018
--

Activist investors Elliott snag 10.3 percent stake in Commvault

Elliott Management, an investment firm long known for its activist streak, set it sights on Commvault today, purchasing a 10.3 percent stake and nominating four Elliott-friendly members to the company’s board of directors. It likely means that Elliott is ready to push the company to change direction and cut costs, if it sticks to its regular MO.

As an older public company founded in 1988 with a strong product, but weak stock performance, Commvault represents just the kind of company Elliott tends to target. In its letter outlining why it acquired its stake in Commvault, it presented a stark picture of a company in decline.

As just one small example, Elliott discussed the stock performance and it didn’t pull punches or mince words when it stated:

“Commvault’s strategy, operations, execution and leadership over the past eight years have failed to generate returns to shareholders, despite a leadership position in a growing market with a product set that customers like and competitors respect. Commvault’s underperformance has been so profound that an investor would have been better off buying the NASDAQ index instead of Commvault’s stock on 99% of trading days in the last eight years. …”

Ouch.

As it is wont to do, Elliott buys a stake and then forces its way onto the board of directors and this deal is no different where it will be adding 4 members:

“Given the long-term issues at the Company, we believe the Board would benefit from fresh perspectives, primarily in the area of operational execution, software go-to-market experience and current technology expertise. The level of required change at the Company is significant and requires a Board with new and relevant experiences to guide the Company’s turnaround. We have been involved in dozens of similar situations and have worked constructively with many companies to add top-tier, C-suite executives and experienced Board members to these companies. For Commvault, we are submitting a group of highly qualified director nominees with what we believe is the right experience to help guide the Company on its path forward.”

As some examples of that past experience it alluded to in the letter, Elliott bought a stake in EMC in 2014 and began to pressure the Board to sell its stake in VMware. The company turned back the attempt and eventually sold out to Dell for $67 billion, still giving Elliott a nice return on its one percent investment in the company, no doubt.

More recently, it bought a  6.5 percent stake in Akamai in December. At the next earnings call in February, the company announced it was laying off 400 employees, which accounted for almost 5 percent of the worldwide workforce. The layoffs are consistent with cost cutting that tends to happen when Elliott buys a stake in a company.

What happens next for Commvault is difficult to say, but investors obviously think there is going to be some movement as the stock is up over 11 percent as of this writing. Chances are they are onto something, and given Elliott’s track record they are probably right.

Apr
02
2018
--

Activist investors Elliott snag 10.3 percent stake in Commvault

Elliott Management, an investment firm long known for its activist streak, set it sights on Commvault today, purchasing a 10.3 percent stake and nominating four Elliott-friendly members to the company’s board of directors. It likely means that Elliott is ready to push the company to change direction and cut costs, if it sticks to its regular MO.

As an older public company founded in 1988 with a strong product, but weak stock performance, Commvault represents just the kind of company Elliott tends to target. In its letter outlining why it acquired its stake in Commvault, it presented a stark picture of a company in decline.

As just one small example, Elliott discussed the stock performance and it didn’t pull punches or mince words when it stated:

“Commvault’s strategy, operations, execution and leadership over the past eight years have failed to generate returns to shareholders, despite a leadership position in a growing market with a product set that customers like and competitors respect. Commvault’s underperformance has been so profound that an investor would have been better off buying the NASDAQ index instead of Commvault’s stock on 99% of trading days in the last eight years. …”

Ouch.

As it is wont to do, Elliott buys a stake and then forces its way onto the board of directors and this deal is no different where it will be adding 4 members:

“Given the long-term issues at the Company, we believe the Board would benefit from fresh perspectives, primarily in the area of operational execution, software go-to-market experience and current technology expertise. The level of required change at the Company is significant and requires a Board with new and relevant experiences to guide the Company’s turnaround. We have been involved in dozens of similar situations and have worked constructively with many companies to add top-tier, C-suite executives and experienced Board members to these companies. For Commvault, we are submitting a group of highly qualified director nominees with what we believe is the right experience to help guide the Company on its path forward.”

As some examples of that past experience it alluded to in the letter, Elliott bought a stake in EMC in 2014 and began to pressure the Board to sell its stake in VMware. The company turned back the attempt and eventually sold out to Dell for $67 billion, still giving Elliott a nice return on its one percent investment in the company, no doubt.

More recently, it bought a  6.5 percent stake in Akamai in December. At the next earnings call in February, the company announced it was laying off 400 employees, which accounted for almost 5 percent of the worldwide workforce. The layoffs are consistent with cost cutting that tends to happen when Elliott buys a stake in a company.

What happens next for Commvault is difficult to say, but investors obviously think there is going to be some movement as the stock is up over 11 percent as of this writing. Chances are they are onto something, and given Elliott’s track record they are probably right.

Powered by WordPress | Theme: Aeros 2.0 by TheBuckmaker.com