Starboard launches proxy fight at Commvault, nominates six to board

BOSTON (Reuters) – Starboard Value has nominated six directors to the board at Commvault, setting the stage for a second battle in two years between the U.S. data protection and data management software company and an activist hedge fund.

Starboard on Thursday told the company that it is nominating six people, including Jeffrey Smith, Starboard’s chief executive, and Gavin Molinelli, a co-portfolio manager at the firm. Commvault has 11 board members.

The New York-based hedge fund now owns 9.91% of the Tinton Falls, NJ-headquartered company, having raised its stake modestly from the 9.3% it owned when it first made a mandatory regulatory filing with the Securities and Exchange Commission on March 30.

News that Starboard had built a position in Commvault helped push the stock price higher over the last days, and it closed trading on Thursday at $41.79, up 2.5%. Starboard’s average purchase price was $35.76.

Starboard, run by Smith, often seeks operational changes at the companies it targets. Starboard’s slate brings board, marketing and chief executive experience and includes Katherine Wagner, Robert Soderbery, Philip Black and Todd Bradley.

The hedge fund began buying forward contracts in February and bought common stock last month, according to a regulatory filing.

Commvault said it tried to engage with Starboard about what skills the board might be missing since learning on March 30 that the hedge fund had taken a stake.

In light of the coronavirus pandemic, Commvault said its biggest priorities are the health and safety of its employees, taking care of its customers and operating its business.

“Notwithstanding these important priorities, Starboard has submitted director nominations, and the Commvault Board will, consistent with its fiduciary duties, consider them,” the company said.

This is the second time in two years that Commvault has faced an activist investor in its stock. Two years ago, Elliott Management and Commvault reached an agreement to add two independent directors suggested by Elliott.

Last year, Commvault CEO Robert Hammer stepped down and was replaced by Sanjay Mirchandani.

Commvault’s stock has dropped 8.7% since January, holding up better than many other companies that have seen their shares battered by panic selling sparked by fears over the spreading coronavirus.

Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman

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source: reuters.com