NEW YORK, Jan 12 (Reuters) – Activist investor Engaged Capital is planning to run a proxy fight to install four outside directors at software maker BlackLine, arguing new blood is needed in the boardroom to pursue strategic options, including a possible sale, two people familiar with the matter said.
Engaged, which owns more than 1 million shares in BlackLine and ranks as one of its 20 largest shareholders, has criticized CEO Owen Ryan and the board for being slow to review alternatives for its business and has pressed management and the board to consider selling the company to a competitor.
A representative for BlackLine was not immediately available for comment.
BlackLine has a market value of $3.4 billion. Its stock price has risen 1.7% in the last 12 months, closing at $56.59 on Friday.
While there has been some contact between the company and the hedge fund, Engaged has not been satisfied with the response and is now ready to dial up the pressure with a full-scale boardroom fight, the sources said.
BlackLine’s board currently has 12 members but the company has announced plans to cut that to 11. Engaged, run by investor Glenn Welling, considers the step an entrenchment maneuver aimed at limiting investors’ ability to elect new and independent directors, the sources said.
The sources said Engaged would name four executives to stand for election at the next annual meeting: Christopher Hetrick, the firm’s director of research; Christopher Young, a former activism defense banker at Jefferies who once headed the special situations research team at proxy advisory firm Institutional Shareholder Services; software industry operator Christopher Hallenbeck, who once worked at SAP; and, Storm Duncan, the founder of technology focused M&A advisory firm Ignatious.
Last year Reuters reported that SAP, Europe’s largest software provider which has a strategic partnership with BlackLine, offered to buy the company for nearly $4.5 billion but was rebuffed.
A handful of other investors have reached out to the company by letter in the last several months urging management and the board to explore strategic alternatives, a source familiar with the matter said.
Engaged, which has been in business for more than a decade, has pushed for changes at a number of firms, including Envestnet and New Relic, which eventually put themselves up for sale.
(Reporting by Svea Herbst-Bayliss; Editing by Edmund Klamann)
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