Aaron Levie
David A. Grogan | CNBC
Box shares fell more than 9 percent on Thursday after the cloud software vendor said investment firm KKR would buy the company’s $ 500 million shares, making it a less likely acquisition.
The stock fell from $ 2.27 to $ 22 at close. Box shares have risen 31% since early 2020, while a broader cloud computing index has nearly doubled, and Nasdaq Composite has risen 43%.
The company, which went public six years ago, has struggled to keep up with Microsoft’s expansion into the cloud-based collaboration space, primarily through its popular Teams product. Box faced pressure from activist investor Starboard in 2019, when the company revealed a 7.5% stake in Box. Reuters reported last month that under Starboard fire, Box was exploring a sale to potential buyers, including private equity firms.
The company said on Thursday that the KKR agreement followed a review of its options.
“After undertaking a comprehensive review of a wide range of strategic options, the Council unanimously agreed that the continued implementation of Box’s long-term strategy in combination with a significant redemption of shares and KKR support is the best way to lead the next phase of growth company, “said Dana Evan, Box’s chief independent officer.
Box also said that co-founder and CEO Aaron Levie will hand over the position of chairman of the board to Bethany Mayer, an independent director and former CEO of Ixia.
The KKR investment will come in the form of convertible shares and will fund a share buyback auction of up to $ 500 million. The share price will be based on market conditions and the share price at the time of the auction.
The current Box market cap is about $ 3.5 billion, which means that if KKR invested at the current price, it would own about 14% of the company.
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