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Under Activist Pressure, Box Reportedly Considering a Sale

By Eric Volkman - Mar 22, 2021 at 9:58PM

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Shareholder Starboard Value is apparently agitating for new ownership.

The clouds might be darkening for cloud-based storage services provider Box (BOX -0.45%) as an independent entity. According to a report published Monday in Reuters, citing "people familiar with the matter," the company is contemplating a sale to an outside entity.

The article's sources say that Box management has discussed such an arrangement with interested buyers, including private equity firms. None of these companies were identified. 

Two people, leaving footprints, going in different directions.

Image source: Getty Images.

Box is apparently feeling the squeeze from hedge fund Starboard Value, a noted and frequently effective activist investor. In mid-2019, Starboard revealed that it had amassed a 7.5% stake in Box, using the boilerplate rationalization that the company was "undervalued and represents an attractive investment opportunity." Starboard was an effective activist, getting three of its chosen candidates on Box's board of directors the following year.

Neither Starboard nor Box management has yet commented on the Reuters article.

Last month, according to another Reuters article again citing "people familiar with the matter," Starboard was gearing up to mount a board challenge unless the company acted to boost shareholder value.

While Box has grown its revenue over the past few years, the pace of that growth is declining, and the company has lately been consistently unprofitable. It has not benefited as much as other online services businesses during the work-from-home trend sparked by the coronavirus pandemic.

As a result, its stock hasn't been very dynamic on a historical basis; even after a nearly 5% spike Monday following the Reuters report, it trades at $23.65 per share. That's only $0.42 higher than its level at the end of the stock's first day of trading following its January 2015 initial public offering (IPO).

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