January 28, 2023

Elliott Management Holds Big Dropbox Stake

Elliott Management Corp. has taken a sizable stake in software company

Dropbox Inc.,

DBX 1.15%

the latest target for the activist hedge fund, according to people familiar with the matter.

Elliott has told Dropbox it is the company’s largest shareholder after Chief Executive Officer

Drew Houston,

the people said. That suggests the hedge fund owns a stake of more than 10%, worth well over $800 million. The two sides have been in talks since earlier this year.

Dropbox, a cloud-computing company with a market value of roughly $11 billion, went public in March 2018 and has been trading below its IPO price for most of that time. Its modest valuation compared with those of other cloud companies such as

Salesforce.com Inc.

and

ServiceNow Inc.

has made it the subject of persistent takeover speculation.

That chatter intensified after Salesforce agreed to buy

Slack Technologies Inc.

last year for $27.7 billion. Other cloud companies have also gotten scooped up recently, including

Cloudera Inc.,

which agreed to sell itself to a pair of private-equity firms earlier this week. Activist

Carl Icahn

is a big Cloudera shareholder.

Dropbox’s primary offering is cloud-based storage, which allows users to store documents, photos and videos online. The company also has an offering that allows teams to edit centralized documents. It also owns DocSend, purchased in March, and HelloSign, which facilitates digital signatures.

Dropbox reported revenue of $1.9 billion last year, an increase of 15%, and has more than 700 million registered users. In May, the company said its first-quarter revenue rose 12% from the previous year. It also announced a new $1 billion share repurchase authorization in the first quarter.

Investors have questioned the company’s growth prospects as services it provides become commoditized and it does less business with lucrative corporate customers than many of its peers. Dropbox laid off around 11% of its workforce in January, not long after the company told employees most of them could work remotely indefinitely.

Mr. Houston, who founded Dropbox with

Arash Ferdowsi

in 2007, holds majority voting control. The company’s next-largest shareholder is Vanguard Group, with a roughly 9.7% stake, according to FactSet.

Activists have historically steered clear of companies with powerful founders given that their work usually depends on being able to build a coalition of shareholder support. But Elliott has broken that mold with past investments in

Twitter Inc.,

SoftBank Group Corp.

and various iterations of computer-and-storage giant

Dell Technologies Inc.,

all of which featured founders with significant stakes and were relatively friendly investments.

Elliott, with more than $40 billion under management, is one of the busiest activist investors. It also has a private-equity arm, Evergreen Coast Capital, that sometimes bids on companies that are targets of the firm’s activist campaigns.

Write to Cara Lombardo at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the June 3, 2021, print edition as ‘Elliott Buys Large Stake in Dropbox.’

in Tech
Related Posts

Apple Subpoenas From DOJ Prompt Internal Review, Calls for William Barr, Jeff Sessions to Testify

June 11, 2021

June 11, 2021

WASHINGTON—The Justice Department’s internal watchdog and Senate Democrats vowed to investigate the Trump administration’s secret seizure of communication records of...

U.S. Seizes Internet Domains Tied to Iran’s Government

June 22, 2021

June 22, 2021

The Iranian government-run website presstv.com was seized by U.S. authorities on Tuesday. Tehran has condemned previous U.S. seizures of websites...

Facebook, Alphabet Keep Rising; Apple, Netflix Fade

June 20, 2021

June 20, 2021

Big tech stocks are going their own ways in 2021. It is a far cry from last year, when the...

Technology Provider Kaseya Warns of Cyberattack

July 3, 2021

July 3, 2021

Kaseya Ltd. warned Friday afternoon that a key software tool used by companies to manage technology at other businesses may...

For Startup Leaders, SPACs Have Lost Their Allure

May 23, 2021

May 23, 2021

Startup chief executives are turning a cold shoulder to SPACs. Skeptical CEOs say they are turning down offers from special-purpose...

Roblox Returns for Many Gamers After Long Outage

November 1, 2021

November 1, 2021

Videogame company Roblox Corp. suffered an outage Thursday evening that continued through Sunday afternoon, leaving children around the globe looking...

Car Makers to Get No Special Treatment in Chip Shortage, Commerce Secretary Says      

May 20, 2021

May 20, 2021

WASHINGTON—Commerce Secretary Gina Raimondo said she is looking for ways to help auto makers amid a global semiconductor shortage but...

Google Settles Antitrust Case Over Advertising Practices

June 7, 2021

June 7, 2021

The French competition authority alleged Google’s advertising server gave the company’s online ad auction house an advantage in advertising auctions....

FTC Vote to Broaden Agency’s Mandate Seen as Targeting Tech Industry

July 1, 2021

July 1, 2021

WASHINGTON—The Federal Trade Commission voted Thursday to broaden its discretion to challenge what it finds to be unfair methods of...

South Korea’s Answer to Robinhood and Venmo Lands a $7 Billion Valuation

June 23, 2021

June 23, 2021

A South Korean company whose app lets users transfer money, take out loans, trade stocks and check their credit scores...

Tesla Executive Jerome Guillen Departs

June 7, 2021

June 7, 2021

Jerome Guillen was president of heavy trucking at Tesla. Photo: Edward Wong/South China Morning Post/Getty Images A longtime Tesla Inc....

Why Express, Urban Outfitters and J.Crew Now Sell Items From All Over Online

June 15, 2021

June 15, 2021

Express Inc., EXPR -8.92% best known as a presence in American malls, has been testing a new strategy: selling other...

Amazon Demands One More Thing From Some Vendors: a Piece of Their Company

June 29, 2021

June 29, 2021

Suppliers that want to land Amazon.com Inc. as a client for their goods and services can find that its business...

Your AirPods Aren’t ‘Magically Connecting’? Here Are Some Things to Try.

May 30, 2021

May 30, 2021

Apple’s website touts the AirPods’ ability to “connect magically” to iPhones and “move seamlessly” between iPhones, Apple Watches, iPads and...

MediaMath Explores Strategic Options as Dealmaking in Ad Tech Picks Up

June 3, 2021

June 3, 2021

Advertising technology company MediaMath has hired bankers to explore its strategic options, including a possible sale, people familiar with the...