Spok's board mulling possible sale following pressure from activist investor Starboard Value

Empty boardroom
Spok reported that more than 5% of its shares have been recently acquired by Acacia Research and its partner, activist hedge fund Starboard Value. (Getty/Chris Ryan)

Spok, a company that provides clinical communication technology to hospitals, is mulling "strategic alternatives," including a possible sale, after unsolicited interest in acquiring some or all of its shares.

In late August, Acacia Research Corporation made a proposal to acquire all of the outstanding shares of common stock of Spok for $10.75 per share in cash, representing approximately $155 million in total enterprise value, according to a filing with the U.S. Securities and Exchange Commission

Shares of Spok Holdings Inc. began trading higher following the news of the proposed acquisition, MarketWatch reported. Spok offers the Spok Go cloud platform, which enables collaboration among medical care team members. The company works with more than 2,200 hospitals that send over 100 million messages each month through their Spok solutions, according to the company.

Shares of Spok Holdings were trading 29% higher at $9.97 a share Monday morning.

In a press release issued last week, Spok reported that more than 5% of its shares have been recently acquired by Acacia Research and its partner, activist hedge fund Starboard Value.

Acadia Research seeks to acquire "undervalued businesses with a primary focus on mature technology, life sciences, industrial and certain financial services segments," according to the company. Starboard Value is the same activist hedge fund that put pressure on health IT company Cerner, which owned 1.2% of the company's outstanding shares, to make changes in order to boost its profitability.

In April 2019, Cerner reached a settlement with Starboard Value to add new directors to its board and buy back more of its shares. Cerner also agreed to take steps to improve operations and committed to hitting certain operating targets. The company also hired consulting firm AlixPartners to review operations and costs.

RELATED: As activist investor steps in, analysts remain uncertain about Cerner's future

Under the agreement, Starboard was allowed to name four members to its board and Cerner also authorized a $1.2 billion stock buyback.

With the assistance of financial and legal advisors, Spok's board recently initiated a review of the company’s strategic alternatives to evaluate potential transactions, including a sale of the company, and other actions that would maximize value for shareholders, Spok executives said in a press release.

The company reported $35 million in revenue for the second quarter of 2021, representing flat growth from the same period a year ago. Spok brought in $148 million for full-year 2020, down 8% from $160 million in 2019.

The board approved a limited-duration shareholder rights plan to ensure the board can conduct an orderly review of strategic alternatives. "The rights plan will not preclude the Spok Board from considering an offer that is fair and in the best interests of Spok shareholders," executives said in the press release.

“Spok’s board is dedicated to maximizing value for all our shareholders,” said Royce Yudkoff, chairman of the Spok board in a statement. “Our goal in disclosing our ongoing strategic alternatives review and adopting the rights plan is to ensure that all interested parties have the opportunity to participate fairly and to provide the Board time to make an informed decision in the best interests of Spok’s shareholders.”

It's not the first time in recent history an investor has put such visible pressure on a healthcare company to make changes.

Notably, health IT company Athenahealth experienced a massive shakeup after activist investor Elliott Management took a 10% stake in the company in May 2017. Elliott subsidiary Evergreen Coast Capital and private equity firm Veritas Capital bought Athenahealth for $5.7 billion last year.