Software company BlackLine has authorized its strategic committee to begin exploring a potential sale or merger following pressure from an activist investor, according to regulatory documents filed Tuesday evening.
The strategic committee now has authority to “explore, evaluate, consider, review, negotiate and, as appropriate, recommend to the board for approval a potential business combination transaction or other similar strategic transaction involving the Company,” the filing states.
This development comes after BlackLine reached a settlement with hedge fund Engaged Capital, which had threatened two months earlier to install new board members focused on pursuing strategic alternatives, including a possible company sale.
As part of the agreement, BlackLine appointed two new directors: Storm Duncan, a technology investment banker recommended by Engaged Capital, and Megan Prichard, an Uber executive with expertise in disruptive technologies and high-growth sectors.
Duncan will join the four-member strategic committee alongside Scott Davidson, Gregory Hughes, and David Henshall, who serves as BlackLine’s lead independent director and chairs the committee. “Storm’s skillset will be additive to the strategic committee, which has been, and continues to be, empowered to evaluate strategic transactions involving the company,” Henshall stated.
The company currently holds a market capitalization of $2.15 billion, though its shares have dropped 33% since January, closing Tuesday at $36.16. Software stocks broadly declined in recent weeks due to concerns about artificial intelligence disrupting the industry.
Previously, Reuters revealed that European software giant SAP, which maintains a strategic partnership with BlackLine, made an unsuccessful bid worth nearly $4.5 billion to acquire the company last year.
Engaged Capital, led by Glenn Welling, has operated for over ten years and has successfully pressured multiple companies to consider sales, including Envestnet and New Relic, both of which ultimately went to market.
