Board member Starboard acquires substantial share in BILL Holdings, intends to propose new board members

In a move that could shake up the tech industry, activist investor Starboard Value has announced its intention to challenge the board of BILL Holdings, a company with a market value of nearly $5 billion.

According to a filing with the U.S. Securities and Exchange Commission, Starboard Value has built an 8.5% stake in BILL Holdings as the company's stock price dropped. The investor may nominate as many as four director candidates before the Saturday deadline.

BILL Holdings, which handles more than 1% of U.S. gross domestic product through its platform, has seen its stock price lose nearly half of its value since January. The company acknowledged its stock is undervalued and announced a $300 million share repurchase plan in August. However, this hasn't been enough to halt the downward trend.

Starboard Value's new stake in BILL Holdings comes at a time when several of the company's rivals have been purchased by strategic buyers or private equity companies. If an activist emerges, their activities could interfere with BILL Holdings' ability to execute its strategies and divert resources from its business.

The news sent BILL Holdings' stock price climbing by up to 10% in after-hours trading. Since its initial public offering in 2019, the company's shares have gained 17%, but have tumbled 86% from their all-time high in November 2021.

BILL Holdings will consider Starboard's candidates when they are officially nominated. The company's board will face a challenge from four of its 12 directors who will stand for election at this year's annual meeting.

Starboard, known for its aggressive tactics, often settles with target companies after nominating director candidates. For instance, two independent directors joined the board of Autodesk earlier this year, after Starboard's involvement.

However, a proxy contest could cost time and money for BILL Holdings. The company's "business could be negatively affected as a result of actions by or proposals from activist stockholders," BILL Holdings said in a regulatory filing.

Jeff Smith, Starboard's CEO and CIO, serves as a director at Kenvue, adding another layer of potential influence in the tech industry. The search results do not provide information about recent acquisitions or potential acquisition targets by Starboard Value.

As the situation unfolds, investors and industry watchers will be keeping a close eye on BILL Holdings and Starboard Value's next moves. The outcome could have significant implications for the tech industry and the future of BILL Holdings.