Aaron Levie
David A. Grogan | CNBC
Box shares fell more than 9% on Thursday after cloud software vendor said investment firm KKR would buy a $ 500 million worth of the company’s shares, making it unlikely an acquisition.
Shares fell from $ 2.27 to $ 22 at the close. Cash shares have risen 31% since early 2020, while a broader cloud computing index has nearly doubled and the Nasdaq Composite has risen 43%.
The company, which went public six years ago, has struggled to keep pace with Microsoft’s expansion into the cloud-based collaboration space, primarily through its popular Teams product. Box has faced pressure from activist investor Starboard since 2019, when the firm revealed a 7.5% stake in Box. Reuters reported last month that under Starboard fire, Box has been exploring a sale to potential buyers, including private equity firms.
The company said on Thursday that the KKR deal followed a review of its options.
“After undertaking a full review of a wide range of strategic options, the Board unanimously determined that continuing to implement Box’s long-term strategy in combination with a significant repurchase of shares and support from KKR is the optimal path to drive the company’s next phase of growth, ”Dana Evan, Box’s chief independent director, said in the statement.
Box also said co-founder and CEO Aaron Levie will hand over his position as chairman of the board to Bethany Mayer, independent director and former CEO of Ixia.
The KKR investment will be made in the form of convertible shares and will fund a stock repurchase 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.
Box’s current market cap is around $ 3.5 billion, which means that if KKR invested at the current price, it would have about 14% of the company.
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