Carbonite Hires New CEO As It Grapples With Hostile Buyout Bid
One day after Carbonite received a hostile buyout bid from J2 Global that sent its shares soaring 23 percent, the cloud-based backup provider fired back by hiring a former Hewlett-Packard top strategist, Mohamad Ali, as its new president and CEO.
Ali succeeds Carbonite Co-Founder and CEO David Friend, who will remain as executive chairman of the Carbonite board of directors. Friend fended off a previous buyout bid two years ago by J2, a diversified cloud and digital media holding company that has a market capitalization of $2.87 billion compared to Carbonite's $385.63 million.
The $15-per-share J2 bid Wednesday for all of the outstanding Carbonite shares sent them soaring to $14.44. The bid values Carbonite, which had 2013 sales of $107.2 million, at $404 million. Carbonite shares closed down 23 cents, or 2 percent, to $14.21 on Thursday.
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Carbonite responded to the J2 buyout bid with a statement that its board of directors would carefully review and consider the offer, taking into "account the company's current strategic plan and growth intitiatives."
Engine Capital LP, meanwhile, which owns 2.5 percent of Carbonite shares, urged the Carbonite board of directors to "immediately initiate" a process to sell the company. "We believe that numerous parties would be interested in the company and are confident that a strategic buyer interested in purchasing the company at a significant premium can be found," said Engine Capital LP Managing Partner Arnaud Ajdler in a letter to the Carbonite board.
Neither Ali, who will join the Carbonite board of directors, nor Friend, noted the J2 buyout bid in the announcement of Ali's appointment.
"I am delighted to turn the reins over to someone of Mohamad's caliber," said Friend in a prepared statement. "The company has a big future in the rapidly evolving cloud-first landscape, and to seize it we must execute with vision and excellence. Mohamad has the right background and skill set to lead the company as it continues to grow."
The Ali appointment comes after a 10-month search for a replacement for Friend, who announced his intent to retire in February.
NEXT: A Carbonite Solution Provider Sounds Off On New CEO Appointment, J2 Hostile Bid
A Carbonite solution provider, who did not want to be identified, praised Carbonite's strong support of the channel and expanding corporate cloud backup product portfolio under Friend's leadership. The solution provider said he hopes that will continue under Ali, who has a solid grasp of software development and strategy, and the importance of an indirect sales channel.
As for the J2 bid, the solution provider said it is unclear just what kind of impact the deal would have on the channel if J2 is successful. "I have no idea what J2 has in mind. They could be like [Berkshire Hathaway CEO] Warren Buffett, who goes in and buys companies, and then it's business as usual with some sharpening of the pencil to work smarter," said the solution provider CEO. "He does not go in and wipe out management."
Ali, who joined Hewlett-Packard as chief strategy officer in September 2012, reported to HP CEO Meg Whitman and was at one time a member of HP's executive committee. Before joining HP, Ali was CEO of the workforce optimization division for call center software maker Aspect Software.
In a filing with the Securities and Exchange Commission, Carbonite said Ali received a $500,000 signing bonus with a base salary of $375,000 per year, along with an option to purchase 250,000 shares at an exercise price of $14.44, and another 450,000 shares of restricted stock units priced at fair market value.
In a prepared statement, Ali expressed his "enthusiasm" for working with the company's channel partners, board of directors and employees. "Carbonite has built a powerful offering," he said. "We're poised to capitalize on opportunities to provide cloud and hybrid business continuity solutions all over the world."
PUBLISHED DEC. 4, 2014