Aaron Levie

David A. Grogan | CNBC

Box shares fell more than 10% on Thursday after cloud software provider said Investment firm KKR will ingest up to $ 500 million in the business, making an acquisition less likely.

The stock fell from $ 2.52 to $ 21.75 in the early afternoon. Box shares have risen 30% since the start of 2020, while a larger cloud computing index has nearly doubled and the Nasdaq Composite has climbed 42%.

The company, which went public six years ago, has struggled to keep pace Microsoft expanding into the cloud-based collaboration space, primarily through its popular Teams product. Box was pressured by an activist investor Starboard since 2019, when the company disclosed a 7.5% stake in Box. Reuters reported Last month, under fire from Starboard, Box explored a sale to potential buyers, including private equity firms.

The company said Thursday that the KKR deal followed a review of its options.

“After conducting a comprehensive review of a wide range of strategic options, the Board has unanimously decided that to continue to execute Box’s long-term strategy in combination with a significant share buyback and the support of KKR, is the optimal way to drive the next phase of the company. growth, ”said Dana Evan, senior independent director of Box, in the release.

Box also said co-founder and CEO Aaron Levie would hand over his role as chairman of the board to Bethany Mayer, an independent director and former CEO of Ixia.

KKR’s investment will take the form of convertible shares and will fund a share buyback auction of up to $ 500 million. The price of the shares will be based on market conditions and the share price at the time of auction.

Box’s current market cap is around $ 3.5 billion, which means that if KKR invested at the current price, they would own around 14% of the company.

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