Benzinga | Jun 3, 2021 07:54AM EDT

Elliott Management Acquired Over 10% Stake in Dropbox

* 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.