Activist Investor Starboard Has Nearly 5% Stake in Splunk
Starboard CEO Jeff Smith to discuss Splunk at Tuesday conference, according to sources
Activist investor Starboard Value LP has a sizable stake in Splunk Inc. SPLK 0.69% and plans to push the software maker to take action to boost its stock price, according to people familiar with the matter.
Starboard’s stake is just under 5%, the people said. The hedge fund often targets software companies that could benefit from operational and margin improvements or be attractive takeover targets.
Starboard founder and Chief Executive Officer Jeff Smith is appearing at an activist-investing conference, the 13D Monitor Active-Passive Investor Summit, Tuesday, and is expected to detail the fund’s thesis then, the people said.
Splunk, founded in 2003, makes software used by companies’ information-technology and security operations to monitor threats and analyze data.
It has a market value of around $11.4 billion after the shares dropped nearly 40% this year amid a broader selloff of technology stocks. In late March, its market value was nearly $24 billion and at the peak in September 2020 was above $35 billion as the pandemic stoked demand for cloud computing.
Earlier this year, when Splunk was without a chief executive and its shares had plummeted following a series of disappointing earnings reports, it attracted takeover interest from at least one strategic suitor: Networking giant Cisco Systems Inc. made a takeover offer worth more than $20 billion for Splunk, The Wall Street Journal reported in February, noting that the companies weren’t in active talks at the time. There isn’t a sign that has changed.
Splunk named Gary Steele as its new CEO in March after former Chief Executive Doug Merritt stepped down from the role late last year. Mr. Steele is the founding CEO of Proofpoint Inc., an information-security company that was acquired by software-investment firm Thoma Bravo in 2021.
The same week as Mr. Steele’s announcement, the private-equity firm Hellman & Friedman LLC disclosed it had taken a 7.5% stake in the software maker, in a big bet on both the company and him. That came after technology-focused private-equity firm Silver Lake made a $1 billion investment in the company last year to help support a transformation of the business. Splunk is nearing the end of a shift from a traditional software-licensing arrangement to a cloud-based subscription model.
Last week, Splunk added two directors to its board, including a partner from Hellman & Friedman. In September, the company said its chief financial officer plans to leave in November to take a position at another company and that it is searching for a new one.
New York-based Starboard, established in 2002, invests across sectors but is especially active in technology. Other recent investments include GoDaddy Inc. and NortonLifeLock Inc.