Elliott Management Acquired Over 10% Stake in Dropbox

Author: Anusuya Lahiri | June 03, 2021 07:54am

Activist fund Elliott Management has procured over 10% stake in Dropbox Inc (NASDAQ:DBX), valued at over $800 million, becoming the cloud storage group's biggest institutional shareholder by beating Vanguard Group, the Wall Street Journal reported.
CEO Drew Houston is the biggest shareholder of the company.
Dropbox's modest valuation of $11 billion compared to cloud peers like Salesforce.com Inc (NYSE: CRM) and ServiceNow Inc (NYSE: NOW) has fueled takeover speculation.
The speculation was intensified by Salesforce's plans of acquiring Slack Technologies Inc (NYSE:WORK) in 2020 for $27.7 billion. KKR & Co Inc (NYSE:KKR) and Clayton Dubilier & Rice LLC recently confirmed an agreement to acquire Cloudera Inc (NYSE:CLDR) for $5.3 billion.
Cloud service companies that failed to capitalize on the pandemic induced remote working trend became obvious activist targets, Financial Times reports
Dropbox 2020 revenue rose 15% year-on-year to $1.9 billion. It has over 700 million registered users.
The company's Q1 2021 revenue rose 12% Y/Y, and it announced a new $1 billion share buyback approval.
Wall Street sees FY21 revenue growth of 10%.
Investors have doubted Dropbox's growth prospects as its service became chargeable, and it does less business with lucrative corporate customers compared to peers. Dropbox laid off around 11% of its workforce in January despite announcing indefinite remote working for most of them.
The share prices have mostly traded below the 2018 initial public offering price.
Price action: DBX shares traded lower by 1.04% at $27.57 in the premarket session on the last check Thursday.