Banking

Box Tumbles As KKR Investment Thwarts Speculation Of A Takeover

Box stock tumbled Thursday after the company announced that private equity giant KKR would lead a $500 million investment in the cloud services provider.




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The announcement came amid recent speculation that Box (BOX) was exploring a sale as activist investor Starboard Value pressured the company over its stock performance.

Starboard took a stake in Box in 2019, saying the company could be an attractive takeover target.

“The announcement confirms recent speculation about the company reviewing strategic alternatives, although we think that near-term oriented investors may have been hoping for an outright sale,” Raymond James analyst Brian Peterson said in a note to clients.

“This is likely what’s pushing Box stock down as our recent inbound inquiries have largely been focused on the potential for Box as a financial or strategic takeout candidate,” he said.

Repurchase Of Box Stock

Box will use the proceeds to fund a share repurchase of up to $500 million of the company’s common stock.

Box stock fell 8.7%, near 22.15 during afternoon trading on the stock market today.

The company provides a cloud-based online data storage and file-sharing platform that lets users store, share and manage files. Its basic service remains free, with fees charged for premium services that include enhanced security and enterprise software tools.

In addition to the strategic investment by KKR, Box also appointed Bethany Mayer as chairman, effective May 1. She joined the Box board one year ago as an independent director as part of a settlement with Starboard. Mayer is also a director at Marvell Technology Group (MRVL) and Sempra Energy (SRE).

She will succeed company founder Aaron Levie as chairman. Levie will retain his role as chief executive and remain a company director.

New Board Member At Box

In addition, John Park, head of Americas Technology Private Equity at KKR, will join Box as a director.

“The investment from KKR is a strong vote of confidence in our vision, strategy, and continued efforts to increase growth and profitability,” Levie said in written remarks with the announcement.

Box held its initial public offering in 2015. Box stocked priced at 21 and raised $756 million.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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