E2open Parent Holdings (NYSE:ETWO) stock is up by more than 20% following news that Paul Singer’s Elliott Investment Management has acquired a 13.8% stake in the company. E2open provides cloud-based supply-chain software for business-to-business companies.
Elliott disclosed ownership of 27.25 million shares of ETWO which were acquired at an average per share price of $2.55. “Further, the fund entered into derivative agreements in the form of cash settled swaps on another 14,526,506 shares,” noted StreetInsider. In total, Elliott put down $69.9 million to acquire its stake.
Elliott’s 13D filing to document its stake showed that the fund may explore other opportunities with E2open. This includes potentially engaging as an “acquirer, investor and/or financing source.” In the meantime, Elliott believes that shares of ETWO are undervalued and will communicate with the company’s board to discuss opportunities that could maximize shareholder value.
ETWO Stock: Elliott Investment Management Discloses 13.8% Stake
As of June 30, Elliott had a 6.8% stake in the company. On Sept. 15, the fund actually sold 1.75 million shares of ETWO at an average per share price of $4.90. However, on Oct. 11, Elliott acquired over 8 million shares of the company at prices ranging between $2.20 and $2.40. The next day, Elliott picked up another 250,000 shares at an average per share price of $2.52.
So, why the sudden change of heart? On Oct. 11, ETWO stock plummeted to an all-time low after the company reported its fiscal 2024 second-quarter earnings. At the same time, E2open also announced that CEO Michael Farlekas would step down while the company searches for a replacement. Andrew Appel will serve as interim CEO as the search moves forward.
“Andrew is well-positioned to continue our core mission of providing the most comprehensive and impactful end-to-end supply chain software platform combining networks, data, and applications,” said Chairman Chinh E. Chu. “While a search for a full-time CEO is underway, the board has full confidence in Andrew and the leadership team to guide the company through this transition.”
During the second quarter, GAAP revenue tallied in at $158.5 million, down by 1.4% year-over-year (YOY). GAAP subscription revenue totaled $134.7 million, up 2.4% YOY. Furthermore, gross margins grew to 50% from 48.2% while the company’s net loss shrunk to $38.6 million from $409.6 million. Many of E2open’s metrics seem to be improving, which may be why Elliott decided to increase its stake.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
