Private equity giant KKR has gotten bullish on Box, the publicly traded cloud storage company, and backed up its bullishness with a big investment in the company. 

KKR has agreed to invest $500 million in Box in the form of convertible preferred stock, giving hopes and much-needed backing to the company amid its struggles with activist investor Starboard Value LP which has pushed for a sale.

• Last month, Box was reported to be exploring selling itself amid pressure from hedge fund Starboard over its stock performance. Compared to its peers, Box’s stock performance has lagged over the years, pulled down by intense competition in its turf from the likes of Google, Microsoft, and Dropbox.

• Under the terms of KKR’s Box investment, it’ll get a board seat at the company that’ll be occupied by John Park, the firm’s Head of Americas Technology Private Equity. Also, Box’s founder and longtime Chairman and CEO Aaron Levie will give up his Chairman position but retain his CEO role.

• As Levie steps down as Chairman, he’ll be replaced in the role by current board member Bethany Mayer.

• For its investment, KKR is buying preferred stock in Box that carries a 3% dividend and will represent approximately 11% of Box’s outstanding shares. The preferred stock can be converted into common stock at any time, and Box may be required to redeem the preferred stock after seven years.

• KKR’s $500 million investment is expected to be finalized next month in May.

• With KKR’s backing, Box now doesn’t need to worry about a forced sale and then focus on its business without heavy pressure from activist shareholders.

Photo: Box CEO Aaron Levie, credit: TechCrunch, licensed under CC BY 2.0

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