Could is not should

8 April 2021

Activist Starboard Value wanted a sale of the $4 bln cloud-services group and board changes. Now KKR will invest $500 mln in convertible preferred stock, which Box will use to repurchase regular shares. Governance improvements are a plus, but it’s a complicated way to buy time.

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Box said on April 8 that KKR will lead a $500 million investment in the cloud services provider and that it plans to use most of the money for a share buyback.

The investment will be in convertible preferred stock. The buyback will begin after Box issues first-quarter results in May and take the form of a Dutch auction.

The company also said founder Aaron Levie will step down as board chairman, and the role would be assumed by current independent director Bethany Mayer, effective May 1. KKR’s John Park will join Box’s board as its 10th member. Levie will remain chief executive.

Reuters reported in February that activist fund Starboard Value was prepared to launch a board challenge against Box if it didn’t take steps to boost shareholder value. In March, Reuters reported Box was exploring a sale of the company.

Starboard took a stake in Box in August 2019. In March 2020, it agreed not to launch a board challenge that year in exchange for Box replacing three board members with independent candidates.

Context News

Box said on April 8 that KKR will lead a $500 million investment in the cloud services provider and that it plans to use most of the money for a share buyback.

The investment will be in convertible preferred stock. The buyback will begin after Box issues first-quarter results in May and take the form of a Dutch auction.

Starboard took a stake in Box in August 2019. In March 2020, it agreed not to launch a board challenge that year in exchange for Box replacing three board members with independent candidates.

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