Box announced this morning that private equity firm KKR is investing $ 500 million in the company, a move that could help the struggling cloud content management provider come out of pressure from activist investor Starboard Value.
The company plans to use the proceeds of what is known as a ‘Dutch auction’ type sale to buy back shares from certain investors at the price determined by the auction, an activity that is expected to take place after the announcement. of its next earnings report in May. This would likely involve the takeover of Starboard, which took a 7.5% stake in the company in 2019.
Last month, Reuters reported that Starboard may seek to fill the majority of board seats when the board meets in June. It could have prompted them to take action, possibly forcing a sale.
While it is not known what will happen now, it seems likely that with this money they will be able to avoid the Starboard action, and with KKR pictured they will be able to have a vision to longer term. Box CEO Aaron Levie sees the move as KKR’s vote of confidence in Box’s approach.
“KKR is one of the world’s leading technology investors with a deep understanding of our market and a proven track record of partnering with companies to create value and drive growth. With their support, we will be even better positioned to build on Box’s leadership in cloud content management as we continue to deliver value to our customers around the world, ”Levie said in a statement.
Under the terms of the deal, John Park, head of technology private equity, Americas at KKR, will join Box’s board of directors. The company also announced that Bethany Mayer, an independent board member, will be appointed chair of the board, effective May 1.
Earlier this year, the company bought electronic signature start-up SignRequest, which could help open up a whole new set of workflows for the business as it tries to expand its market. With the backing of KKR, it is not unreasonable to expect Box, which has positive cash flow, to take additional steps to expand the platform in the future.
Box’s stock was down more than 8% before it went to market, a signal that Wall Street may not be thrilled with the announcement, but the influx of cash should give Box some leeway to reset and move forward.