Activist investor Starboard Value disclosed on Thursday that it has built an 8.5% stake in BILL Holdings (BILL.N) and plans to nominate directors as part of a boardroom challenge to push for changes at the financial automation software company. The move was confirmed in a U.S. Securities and Exchange Commission filing, which followed a Reuters report earlier in the day.
BILL Holdings’ shares surged as much as 10% in after-hours trading after the news. The company, headquartered in San Jose and valued at nearly $5 billion, processes more than 1% of U.S. GDP through its platform but has seen its stock lose almost half its value since January. Shares have fallen 86% from their November 2021 peak, though the company has authorized a $300 million share repurchase program, acknowledging its stock is undervalued.
Starboard’s filing said it intends to nominate director candidates, and discussions with management and the board are ongoing. Four of BILL’s 12 directors are up for election at this year’s annual meeting, and sources said Starboard may put forward as many as four nominees before Saturday’s deadline. BILL stated that it values engagement with all shareholders and will consider Starboard’s candidates once officially nominated.
While BILL expects revenue to grow up to 15%, it currently trades at just three times revenue, making it one of the least expensive U.S. technology firms. Analysts say this, along with increasing M&A activity in the sector, could make it an attractive acquisition target. Rivals such as Melio, AvidXchange, and Esker have all recently been acquired by strategic buyers or private equity firms.
Starboard has a track record of pushing operational improvements and strategic changes. It has recently taken positions in Rogers (ROG.N) and Tripadvisor (TRIP.O), and has previously reached boardroom settlements at Autodesk (ADSK.O) and Kenvue (KVUE.N). BILL, in its latest 10-K filing, acknowledged the potential disruption activist investors could bring, warning that proxy contests could divert resources and impact business execution.