- KKR is investing $500 million in Box at a price and amount that will be determined based on market conditions at the time of the offer.
- Co-founder and CEO Aaron Levie is handing over the position of chair to Bethany Mayer, who is an independent board member.
- Box has underperformed the broader cloud software market and has faced increasing pressure from an activist investor.
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Box shares dropped more than 10% on Thursday after the cloud software vendor said investment firm KKR will ingest up to $500 million into the company, making an acquisition less likely.
The stock fell $2.52 to $21.75 as of early afternoon. Box shares are up 30% since the beginning of 2020, while a broader cloud-computing index has almost doubled and the Nasdaq Composite has climbed 42%.
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 disclosed a 7.5% stake in Box. Reuters reported last month that, under fire from Starboard, 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 comprehensive review of a wide range of strategic options, the Board unanimously determined that continuing to execute Box's long-term strategy in combination with a significant share repurchase and the support of KKR, is the optimal path to drive the company's next phase of growth," Dana Evan, Box's lead independent director, said in the statement.
Box also said that co-founder and CEO Aaron Levie will hand over his position as board chair to Bethany Mayer, an independent director and the former CEO of Ixia.
The KKR investment will come in the form of convertible stock and will fund a share repurchase auction of up to $500 million. The pricing of the shares will be based on market conditions and the stock price at the time of auction.
Box's current market cap is around $3.5 billion, meaning that if KKR were to invest at the current price it would own about 14% of the company.
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