ACI Worldwide signs agreement with Starboard to add two independent directors
Key summary: Starboard engaged with ACI Worldwide in Oct '20, urged sale in Dec '20, reached Board deal in Feb '21, reduced stake to 4.9% by Apr '22Market Cap: $3.5 billion | ACI Worldwide, Inc. develops, markets, installs, and supports a range of software products and solutions for facilitating electronic payments to banks, financial intermediaries, merchants, and billers worldwide.
SUMMARY
On October 22, 2020, Starboard issued a presentation on the company at the [C4K Investors Conference]. It stated that the company had underperformed peers, including Blackbaud, Commvault Systems, and FireEye, among others, despite its favorable business characteristics and unique collection of assets. It mentioned that the company was trading at 13x consensus and approximately ~9.5x Pro Forma EBITDA, which was a notable discount to select peers. Starboard believed that the company was an attractive takeover target.
On December 2, 2020, Starboard (8.7%) delivered a letter to the Chairman of the Board, President, and CEO of the company, expressing its belief that the Board should explore all available strategic alternatives to maximize value, including a sale of the company. Starboard conveyed its disappointment in the company’s standalone plan and projected improvements in organic growth and profitability. It stated that although the company’s long-term plan might have created value, the plan wasn't good enough to justify remaining a standalone public company, carried significant execution risk, and would have required years to complete. Given the company’s conservative guidance figures, including its low annualized organic growth rate and margin guidance over the next few years, Starboard believed it was incumbent upon the Board to assess the potential value that could have been realized through a sale of the company.
On February 24, 2021, Starboard (7.7%) entered into an agreement with the company regarding the composition of the Board. Pursuant to the terms of the Agreement, the company agreed to increase the size of the Board from ten (10) directors to twelve (12) directors and appoint two (2) new independent directors selected from the list of independent director candidates agreed upon between the company and Starboard.
On April 1, 2022, Starboard reduced its stake to 4.9%.