Technology
Tuesday, November 28th, 2023 3:01 pm EDT
Key Points
- Anson Funds’ Activist Move on Twilio:
- Activist investor Anson Funds has acquired a stake in enterprise software company Twilio and has reportedly sent a letter to the company’s board advocating for a strategic shift. The key demand in the letter is the sale of the entire business. Anson Funds, which did not hold any Twilio stock as of September 30, has since built a stake valued at around $50 million, coinciding with the hiring of Sagar Gupta from Legion Partners. Gupta led activist engagements with both Twilio and Nutanix, a cloud computing firm.
- Twilio’s Share Reaction and Challenging Year:
- Following the news of Anson Funds’ involvement and the call for strategic changes, Twilio’s shares experienced a brief 2% increase in Tuesday morning trading but have since retraced most of those gains. The development comes at the end of a challenging year for Twilio, a company specializing in software that facilitates business-customer engagement. Despite the stock being up around 28% year-to-date, it remains below its 2021 highs. Twilio underwent significant changes, including a workforce reduction of around 17% (1,500 employees) in February, citing the need for heightened efficiency. Similar layoffs occurred in September 2022.
- Activist Push for Strategic Shift and Tech Acquisitions Landscape:
- Anson Funds’ push for a strategic shift at Twilio, either through a full sale or divestiture of its data and applications business, reflects a broader trend of activist attention in the tech sector. The company had implemented a reorganization in February, creating two new business units, which it stated reflected input from shareholders. However, Anson Funds is urging the board to consider divesting the data and applications business unit if a full sale to a strategic buyer cannot be secured. The article also highlights notable tech acquisitions in 2023, including Silver Lake and CPP Investments’ deal to take survey software company Qualtrics private in a $12.5 billion deal, IBM’s acquisition of software maker Apptio in a $4.6 billion cash deal, and Cisco’s announcement to take cybersecurity firm Splunk private in a $28 billion cash deal in September. Twilio, co-founded by CEO Jeff Lawson in 2008, went public in 2016 and currently holds a market cap of around $11.6 billion.
Activist investor Anson Funds has recently acquired a stake in Twilio, an enterprise software company, and is reportedly pushing for the sale of the entire business, according to a source familiar with the matter. Twilio’s shares experienced a brief uptick of 2% following the news, though they later receded. Anson Funds, which did not hold any Twilio stock as of September 30th, has since built a stake valued at approximately $50 million.
The activist investor, through a letter to Twilio’s board, is advocating for either the complete sale of the company or, at a minimum, the divestiture of its data and applications business. This move aligns with Anson’s hiring of Sagar Gupta from Legion Partners, who had previously been engaged in activist efforts with both Twilio and Nutanix, a cloud computing firm.
Twilio, a company specializing in software that facilitates business-customer engagement, has faced challenges throughout the year. While its stock has seen a 28% year-to-date increase, it remains below its 2021 highs. In response to the need for heightened efficiency, Twilio initiated a workforce reduction in February, cutting around 1,500 employees or 17% of its workforce. This followed a similar headcount reduction in September 2022.
Additionally, Twilio underwent a reorganization in February, establishing two new business units: Data & Applications and Communications. The company asserted that this restructuring incorporated feedback from its shareholders. However, the activist investor is urging the board to divest the Data & Applications business unit if a full sale to a strategic buyer cannot be secured.
The broader context includes a relatively challenging environment for Twilio amid shifts in its organizational structure and strategic focus. Tech acquisitions in 2023 have seen notable plays, such as the $12.5 billion deal to take survey software company Qualtrics private, the $4.6 billion cash acquisition of software maker Apptio by IBM in June, and Cisco’s announcement to take cybersecurity firm Splunk private in a $28 billion cash deal in September.
Twilio, founded in 2008 by CEO Jeff Lawson, underwent an IPO in 2016 and currently holds a market cap of approximately $11.6 billion. The call for strategic changes by Anson Funds adds to the complexities of Twilio’s journey, with its leadership now navigating shareholder activism amid ongoing efforts to enhance the company’s long-term value.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/28/activist-fund-anson-takes-twilio-stake-urges-board-to-sell.html
