By Svea Herbst-Bayliss
NEW YORK (Reuters) -Activist investor Starboard Value owns an 8% stake in BILL Holdings and may run a boardroom challenge to push for changes at the financial automation software company that serves small and midsize businesses around the world, two sources familiar with the matter told Reuters.
BILL Holdings, which has a market value of nearly $5 billion and sees more than 1% 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% but have tumbled 86% from their all-time high in November 2021 to $46.88 on Thursday. The company acknowledged that its stock is undervalued when it announced a $300 million share repurchase plan in August.
Starboard has been building the position as BILL Holdings’ stock price dropped recently. The firm is expected to make 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% and they plan to push for changes, said the sources who are familiar with the matter but not permitted to discuss it publicly.
Starboard could not be reached for comment. BILL Holdings was not immediately available for comment.
While the company is expecting revenue to grow by as much as 15%, 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.
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% stake in engineering materials maker Rogers and a more than 9% investment in travel company Tripadvisor.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)
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