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Elliott Management Acquired Over 10% Stake in Dropbox

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  • DBX
  • Activist fund Elliott Management has procured over 10% stake in Dropbox Inc (NASDAQ: DBX), valued at over $800 million, becoming the cloud storage group's biggest institutional shareholder by beating Vanguard Group, the Wall Street Journal reported.

  • CEO Drew Houston is the biggest shareholder of the company.

  • Dropbox's modest valuation of $11 billion compared to cloud peers like Salesforce.com Inc (NYSE: CRM) and ServiceNow Inc (NYSE: NOW) has fueled takeover speculation.

  • The speculation was intensified by Salesforce's plans of acquiring Slack Technologies Inc (NYSE: WORK) in 2020 for $27.7 billion. KKR & Co Inc (NYSE: KKR) and Clayton Dubilier & Rice LLC recently confirmed an agreement to acquire Cloudera Inc (NYSE: CLDR) for $5.3 billion.

  • Cloud service companies that failed to capitalize on the pandemic induced remote working trend became obvious activist targets, Financial Times reports

  • Dropbox 2020 revenue rose 15% year-on-year to $1.9 billion. It has over 700 million registered users.

  • The company's Q1 2021 revenue rose 12% Y/Y, and it announced a new $1 billion share buyback approval.

  • Wall Street sees FY21 revenue growth of 10%.

  • Investors have doubted Dropbox's growth prospects as its service became chargeable, and it does less business with lucrative corporate customers compared to peers. Dropbox laid off around 11% of its workforce in January despite announcing indefinite remote working for most of them.

  • The share prices have mostly traded below the 2018 initial public offering price.

  • Price action: DBX shares traded lower by 1.04% at $27.57 in the premarket session on the last check Thursday.

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