Starboard built big stake in BILL Holdings, plans to nominate directors
FILE PHOTO: Jeff Smith, CEO and founder of Starboard Value, speaks during 13D Monitor's Active-Passive Investor Summit in New York City, U.S., October 22, 2024. REUTERS/Brendan McDermid/File Photo
NEW YORK :Activist investor Starboard Value owns an 8.5 per cent stake in BILL Holdings and intends to run a boardroom challenge to push for changes at the financial automation software company that serves small and midsize businesses around the world, it said in a filing on Thursday.
Starboard has been building the position as BILL Holdings' stock price dropped recently. The firm made a filing with the U.S. Securities and Exchange Commission, which requires asset managers to report holdings at U.S. companies where their stake exceeds 5 per cent. Starboard said in the filing it plans to push for changes, confirming an earlier report by Reuters.
The stock price climbed by as much as 10 per cent in after-hours trading following the Reuters report.
The filing said Starboard intends to nominate director candidates and has engaged with the company and expects to continue talking with management and the board.
BILL Holdings, which has a market value of nearly $5 billion and sees more than 1 per cent of U.S. gross domestic product flow through its platform, saw its stock price lose nearly half of its value since January.
Since its initial public offering in 2019, the San Jose-headquartered company's shares have gained 17 per cent but have tumbled 86 per cent from their all-time high in November 2021 to $46.69 on Thursday. The company acknowledged that its stock is undervalued when it announced a $300 million share repurchase plan in August.
BILL Holdings said in a statement that its board and management team are committed to driving sustainable, long-term growth and value creation.
"We believe in BILL’s future and are confident in our ability to drive revenue growth and profitability, and create sustained value for our customers, partners, and shareholders. Our conviction is underscored by the Company’s recently announced $300 million share repurchase program," the statement said.
The company also said that all shareholders are important, and it plans to "engage with Starboard to understand their views as we do with other shareholders."
While the company is expecting revenue to grow by as much as 15 per cent, it trades at only three times revenue, making it one of the least expensive technology companies, analysts have said.
Four of the company's 12 directors will stand for election at this year's annual meeting and the sources said Starboard may nominate as many as four director candidates before the Saturday deadline. BILL said it will consider Starboard's candidates when they are officially nominated.
Further details about Starboard's plans for changes at BILL Holdings could not be learned.
Starboard often nominates director candidates and then settles later with target companies like Band-Aid maker Kenvue, where the firm's chief executive officer and chief investment officer Jeff Smith now serves as a director, and at software design company Autodesk, where two independent directors joined the board earlier this year.
In its 10-K annual report filed last month, the company said its "business could be negatively affected as a result of actions by or proposals from activist stockholders," adding that a proxy contest could cost time and money and that "if an activist were to emerge, their activities could interfere with our ability to execute our strategies and divert resources from our business."
Starboard's new stake in BILL Holdings comes at a time several of the company's rivals have been purchased by strategic buyers or private equity companies. The M&A markets became more active after investors felt more comfortable with President Donald Trump's new tariff and tax policies.
Melio is being bought by Xero while AvidXchange is being purchased by private equity company TPG and Esker was bought by Bridgepoint. The pace of activity has led some analysts to speculate that BILL Holdings might also be an attractive acquisition candidate.
Starboard is known for proposing operational improvements and pushing for strategic changes at its target companies and the firm has a history of making investments in the technology sector. The firm has also been especially busy in recent months, reporting a more than 9 per cent stake in engineering materials maker Rogers and a more than 9 per cent investment in travel company Tripadvisor.
