Biz

Blackbaud Coughs Up Poison Pill

“They’ve decided their best bet is to drive up their stock and get the hell out before things get worse.”

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Days after our media outlet posted an update on its latest corporate drama, the board of Charleston, South Carolina-based software giant Blackbaud voted unanimously to terminate its stockholder rights plan – with immediate effect.

According to a news release from the company, the stockholder rights plan – which was scheduled to expire in October – was “not necessary, at this time, to serve the best interests of all stockholders.”

Stockholder rights plans are often referred to as “poison pills.” They are defensive tactics aimed at deterring hostile takeovers by hedge funds. Typically, “poison pills” include provisions like the establishment of ownership limits on shares – or the dilution of shares via restrictive stock offerings.

Just last fall, Blackbaud’s corporate board extended its stockholder rights plan through October 2024 in an apparent effort to ward off (or get a better deal out of) an attempted takeover by California-based Clearlake Capital Group LP. A private investment firm founded in 2006, Clearlake is “known for taking over companies and divesting them,” according to an industry insider.

That could translate into job losses in South Carolina during what is already a difficult time for its workforce.

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Blackbaud was founded in 1981 in New York City but relocated to the Palmetto State in 1989. The firm did more than a billion dollars of business in 2022 and had total assets of nearly $3 billion. Blackbaud employed more than 3,000 people around the globe, as of 2023 – most of them remote employees. An estimated 1,000 of those employees live and work in South Carolina.

Blackbaud bills itself as “the leading software provider exclusively dedicated to powering social impact” and the “world’s leading cloud software company powering social good.”

As we exclusively reported last month, Blackbaud chief executive officer Michael P. Gianoni was arrested on suspicion of driving under the influence (DUI) on the Isle of Palms on February 16, 2024. Just four days after his arrest, Gianoni sold more than 25,000 shares of Blackbaud, according to SEC filings. Over the past year, he has sold nearly 50,000 shares and has made no purchases of company stock.

In addition to the drama surrounding Gianoni – and Blackbaud’s failure to meet its fourth quarter revenue estimates – the company is staring down multiple lawsuits tied to a May 2020 ransomware hack that impacted over a million files. Earlier this month, U.S. district court judge Joseph Anderson heard arguments on consolidating these lawsuits into a single class action complaint against the company.

“I think at this point with everything going on, they’ve decided their best bet is to drive up their stock and get the hell out before things get worse,” a source familiar with the situation told this media outlet.

Blackbaud’s stock was trading as high as $87.75 in late December, but plunged to $67.35 in the days following Gianoni’s arrest. When the market opened this morning (March 19, 2024), it was trading at $70.30.

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ABOUT THE AUTHOR …

(Travis Bell Photography)

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina and before that he was a bass guitarist and dive bar bouncer. He lives in the Midlands region of the state with his wife and seven (soon to be eight) children.

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