{"id":24219,"date":"2021-05-08T05:36:07","date_gmt":"2021-05-08T05:36:07","guid":{"rendered":"https:\/\/rbsitsoftwaresolution.com\/blog\/starboard-value-puts-box-on-notice-that-its-looking-to-take-over-board.html"},"modified":"2021-05-08T05:36:07","modified_gmt":"2021-05-08T05:36:07","slug":"starboard-value-puts-box-on-notice-that-its-looking-to-take-over-board","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/starboard-value-puts-box-on-notice-that-its-looking-to-take-over-board.html","title":{"rendered":"Starboard Value puts Box on notice that it\u2019s looking to take over board"},"content":{"rendered":"

Activist investor Starboard Value<\/a> is clearly fed up with Box and it let the cloud content management know it in no uncertain terms in a letter published yesterday<\/a>. The firm, which bought a 7.7% stake in Box<\/a> two years ago, claims the company is underperforming, executing poorly and making bad business decisions \u2014 and it wants to inject the board of directors with new blood.<\/p>\n

While they couched the letter in mostly polite language, it\u2019s quite clear Starboard is exasperated with Box. \u201cWhile we appreciate the dialogue we have had with Box\u2019s management team and Board of Directors (the \u201cBoard\u201d) over the past two years, we have grown increasingly frustrated with continued poor results, questionable capital allocation decisions, and subpar shareholder returns,\u201d Starboard wrote in its letter.<\/p>\n

Box, as you can imagine, did not take kindly to the shot across its bow and responded in a press release<\/a> that it has bent over backwards to accommodate Starboard, including refreshing the board last year<\/a> when they added several members, whom they point out were approved by Starboard.<\/p>\n

\u201cBox has a diverse and independent Board with directors who bring extensive technology experience across enterprise and consumer markets, enterprise IT, and global go-to-market strategy, as well as deep financial acumen and proven track records of helping public companies drive disciplined growth, profitability, and stockholder value. Furthermore, seven of the ten directors on the Box Board will have joined the Board within the last three years,\u201d the company wrote in a statement. In other words, Box is saying it already has injected the new blood that Starboard claims it wants.<\/p>\n

Box recently got a $500 million cash injection from KKR<\/a>, widely believed to be an attempt to bulk up cash reserves with the goal of generating growth via acquisition. Starboard was particularly taken aback by this move, however. \u201cThe only viable explanation for this financing is a shameless and utterly transparent attempt to \u201cbuy the vote\u201d and shows complete disregard for proper corporate governance and fiscal discipline,\u201d Starboard wrote.<\/p>\n

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KKR hands Box a $500M lifeline<\/a><\/p>\n<\/blockquote>\n

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Alan Pelz-Sharpe, founder and principal analyst at Deep Analysis, a firm that closely tracks the content management market, says the two sides clearly aren\u2019t aligned, and that\u2019s not likely to change. \u201cStarboard targeted and gained a seat on the board at Box at a difficult time for the firm, that\u2019s the modus operandi for activist investors. Since that time there has clearly been a lot of improvements in terms of Box\u2019s financial goals. However, there is and will remain a misalignment between Starboard\u2019s goals, and Box led by Levie as a whole. Though both would like to see the share price rise, Starboard\u2019s end goal is most likely to see Box acquired, sooner rather than later, and that is not Box\u2019s goal,\u201d he said.<\/p>\n

Starboard believes the only way to resolve this situation is to inject the board with still more new blood, taking a swipe at the Box leadership team while it was at it. \u201cThere is no good reason that Box should be unable to deliver improved growth and profitability, at least in-line with better performing software companies, which, in turn, would create significant shareholder value,\u201d Starboard wrote.<\/p>\n

As such the firm indicated it would be putting up its own slate of board candidates at the company\u2019s next board meeting. In the tit for tat that has been this exchange, Box indicated it would be doing the same.<\/p>\n

Meanwhile Box vigorously defended its results. \u201cIn the past year, under the oversight of the Operating Committee, the company has made substantial progress across all facets of the business \u2014 strategic, operational and financial \u2014 as demonstrated by the strong results reported for the full year of fiscal 2021,\u201d the company wrote, pointing to its revenue growth last fiscal year as proof of the progress, with revenue of $771 million up 11% year over year.<\/p>\n

It\u2019s unclear how this standoff will play out, but clearly Starboard wants to take over the Board and have its way with Box, believing that it can perform better if it were in charge. That could result ultimately, as Pelz-Sharpe suggested, in Box being acquired.<\/p>\n

We would appear to heading for a showdown, and when it\u2019s over, Box could be a very different company, or the current leadership could assert control once and for all and we could proceed with Box\u2019s current growth strategy still in place. Time will tell which is the case.<\/p>\n

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As activist investors loom, what\u2019s next for Box?<\/a><\/p>\n<\/blockquote>\n

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Article source: http:\/\/feedproxy.google.com\/~r\/techcrunchIt\/~3\/QqAFQuxg7h4\/<\/p>","protected":false},"excerpt":{"rendered":"

Activist investor Starboard Value is clearly fed up with Box and it let the cloud content management know it in no uncertain terms in a letter published yesterday. The firm, <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[19],"tags":[25],"class_list":["post-24219","post","type-post","status-publish","format-standard","hentry","category-enterprise-software","tag-enterprise"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t