In a strategic move, activist investor Anson Funds has acquired a significant stake in Twilio, the enterprise software company, and is urging the board to explore the sale of the entire business, according to sources familiar with the matter.
Twilio shares experienced a nearly 4.5% surge in Tuesday’s trading session following the news of Anson Funds’ involvement. Anson, which did not hold any Twilio stock as of September 30, has since built up a stake valued at around $50 million, as reported by an anonymous source. The letter sent to Twilio’s board recommends either a full sale of the company or, at the very least, divesting its data and applications business.
This move aligns with Anson’s recent hiring of Sagar Gupta, previously associated with Legion Partners, a firm engaged in activist activities with companies like Twilio and Nutanix, a cloud computing firm. The stake’s growth coincides with Gupta’s involvement in activist engagements.
While Twilio’s stock has seen a 28% increase year-to-date, the company faced a challenging year marked by significant changes. In February, Twilio initiated a workforce reduction, cutting around 1,500 employees (17% of its workforce) to enhance operational efficiency. This followed a similar reduction in September 2022. In the same month, the company implemented a reorganization, creating two new business units: Data & Applications and Communications.
In response to the news, a Twilio spokesperson stated, “Twilio regularly engages with shareholders and appreciates constructive input that furthers our goal of creating sustainable long-term value.” The spokesperson also mentioned that the February reorganization reflected input from Twilio’s shareholders.
Anson Funds’ call for a sale or divestiture of business units comes amid notable tech acquisitions in 2023, including deals by Silver Lake and CPP Investments for survey software company Qualtrics, IBM’s acquisition of software maker Apptio, and Cisco’s announcement of taking cybersecurity firm Splunk private in a $28 billion cash deal in September.
Twilio, founded in 2008 by Co-founder and CEO Jeff Lawson, went public in 2016 and currently boasts a market cap of around $11.6 billion. As Anson Funds becomes a vocal participant in Twilio’s trajectory, the enterprise software company faces critical decisions regarding its strategic direction and potential changes to its business structure.