Splunk Gains on Report Activist Investor Starboard Has a 5% Stake, Buyout ‘More Likely Than Not’
2022.10.17 08:38
© Reuters. Splunk (SPLK) Gains on Report Activist Investor Starboard Has a 5% Stake
By Senad Karaahmetovic
Shares of Splunk (NASDAQ:) are up over 5% in pre-open Monday after the WSJ reported that activist investor Starboard Value holds a near-5% stake in the software company.
Starboard is reportedly pushing Splunk’s board to make changes. New actions would be aimed at boosting Splunk’s stock price, which is down almost 70% from 2020 high.
Starboard often targets underperforming software companies with room for operational and margin improvements.
It wouldn’t be surprising that Starboard founder and CEO Jeff Smith also sees SPLK as a solid takeover target. Based on Friday’s closing price, the company’s market capitalization was just under $11.5 billion.
Earlier in 2022, Cisco (NASDAQ:) made a bid of over $20 billion for Splunk, the WSJ reported in February. Shortly afterward, the private equity firm Hellman & Friedman said it had a 7.5% stake in Splunk, an involvement which resulted in one of the company’s partners earning a board seat at Splunk.
Last year, the private equity giant Silver Lake invested $1 billion in Splunk to fund the company’s transformation from a traditional software-licensing arrangement to a cloud-based subscription model.
More information about Starboard’s involvement will likely become available this week when Jeff Smith appears at a 13D Monitor Active-Passive Investor Summit.
Needham & Company analysts are not surprised by reports about SPLK. They view the buyout as “more likely than not.”
“Investors we have spoken with this year have increasingly viewed a buyout of Splunk as a binary event. We believe the volume of potential buyout candidates and activist investor agitation indicates a deal is likely. Separately, we view Mr. Smith’s expected conference presentation and discussion on Splunk as rallying support for a takeout,” analysts wrote in a client note.
