Commvault swallows poison pill to fend off Starboard Value

Commvault has adopted a poison pill shareholder rights plan in response to Starboard Value taking a 9.3 per cent stake in the company.

Starboard, which revealed its buying spree in the data management vendor last week, wields a big stick. The activist investor seeks out “deeply undervalued companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.”

Commvault did not mention Starboard by name. But it said in a statement last week the rights plan is “intended to protect the interest of the Company and its shareholders by reducing the likelihood that any person or group gains control of Commvault through open market accumulation or other tactics without paying an appropriate control premium.”

The plan will help “ensure that the Board has sufficient time to make informed decisions that are in the best interests of the Company and all Commvault shareholders.”

The poison pill is activated when an investor builds a holding above 10 per cent – or 20 per cent in the case of certain passive Commvault investors. This triggers a share buying discount of 50 per cent and “Rights held by any entity, person or group whose actions trigger the Rights Plan, and those of certain related parties, would become void.”

Commvault’s rights plan runs from April 3, 2020 and expires on April 1, 2021.