What happened
Shares of E2open Parent Holdings (ETWO 5.65%) were up 24.5% as of 1:30 p.m. ET Monday after billionaire activist investor Paul Singer took a significant stake in the company through his firm Elliot Investment Management.
So what
In a Securities and Exchange Commission (SEC) filing this morning, E2open disclosed that Elliot Investment Management now owns 27.25 million shares at a cost of just over $69.6 million, or $2.55 per share. Elliot also entered into derivative agreements in the form of cash-settled swaps on another 14,526,506 shares. All told, that brings Elliot's stake to around 13.8% of the company -- more than doubling the 6.8% stake it held as of June 30, 2023.
The timing of the move is no coincidence; E2open stock only just plunged more than 40% last week after the company announced disappointing quarterly results, reduced its full-year outlook, and announced the resignation of its CEO. In an earnings press release, E2open CFO Marje Armstrong admitted the company's "growth rate remained below [its] potential." Armstrong also suggested revenue headwinds will likely persist for several quarters as the company implements initiatives aimed at improving its go-to-market performance and reaccelerating growth.
Now what
Elliot Investment Management says it believes the stock is undervalued, and according to Bloomberg, the firm is considering a proposal to acquire E2open outright in order to take the company private.
Indeed, going private might well remove significant pressure as E2open works along its extended path back to sustained, profitable growth. And such an offer would likely be welcomed by weary shareholders who've endured a nearly 50% year-to-date drop even after today's bounce.
