Jana Partners Is Pushing Vonage to Sell or Break Up
(Bloomberg) -- Activist investor Jana Partners has called on Vonage Holdings Inc. to hire advisers to explore strategic alternatives, including a possible sale of all or parts of the telecommunications services company, according to people familiar with the matter. Vonage rose as much as 11% on the news.
The New York-based hedge fund, which owns about 4% of Vonage, has discussed its views with the company and fellow shareholders after a previous review of the company’s consumer business failed to result in a sale, the people said, asking not to be identified because the matter is private.
Jana, which is run by Barry Rosenstein, has conveyed in those discussions that it believes Vonage’s current corporate structure prevents its underlying businesses from achieving their true value, the people said. It has called on the company to launch a review with an eye to improving returns for shareholders, they said.
The stock rose 5.8% to $14.28 at 10:04 a.m. in New York, giving the company a market value of about $3.6 billion.
Vonage, based in Holmdel, New Jersey, provides business communications services, contact centers and so-called application programming interface software, or APIs, which allow apps to work with each other, according to its website.
A representative for Jana declined to comment. A representative for Vonage wasn’t immediately available for comment.
Vonage announced in February it was terminating a sales process for its consumer business after a nine-month strategic review. The company said its decision to call off the sale was driven by valuation, the $600 million of cash generation it expected over the next five years from the division, and what it felt was in the best interest of the company and its shareholders.
The company delivered a second quarter result this month that beat analysts’ expectations. It also boosted its revenue forecast for the year by about 2.2% to as much as $1.39 billion.
Jana has a history of pushing for breakups or sales of companies, including most recently at Laboratory Corp. of America Holdings and Encompass Health Corp. Both LabCorp and Encompass are conducting strategic reviews.
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