Activist investor Engaged Capital is preparing to launch a proxy contest at financial software provider BlackLine, as it steps up pressure on the company to pursue strategic alternatives, including a potential sale, according to a report by Reuters.
The report cites unnamed people familiar with the matter as revealing that Engaged plans to nominate a slate of four outside candidates for election to BlackLine’s board at the company’s next annual meeting. The hedge fund, which owns more than one million shares and ranks among BlackLine’s top 20 shareholders, has been critical of management and the board for what it sees as a slow and insufficient review of options to enhance shareholder value.
Engaged has argued that fresh perspectives are needed in the boardroom to properly assess a sale or other strategic transactions. While the fund has previously engaged privately with the company, it is said to be dissatisfied with the response and is now ready to escalate its campaign.
BlackLine currently has a market capitalisation of around $3.4bn. Its shares have risen modestly over the past year, closing at $56.59 on Friday.
The company’s board currently consists of 12 directors, although BlackLine has announced plans to reduce the number to 11. Engaged views the move as an entrenchment tactic designed to limit shareholders’ ability to elect new directors.
The proposed nominees include Engaged’s director of research Christopher Hetrick; Christopher Young, a former Jefferies banker and ex-head of special situations research at proxy advisory firm ISS; software industry executive Christopher Hallenbeck, formerly of SAP; and Storm Duncan, founder of technology-focused M&A advisory firm Ignatious.
Engaged’s push comes amid broader shareholder pressure. Reuters previously reported that SAP, which has a strategic partnership with BlackLine, made an acquisition offer of nearly $4.5bn last year that was rejected. Other investors have also urged the board in recent months to explore strategic alternatives.
