Reading the fine print on Box’s deal with KKR

Box CEO Aaron Levie might have bought himself a brief reprieve. Last week his company announced that it had entered into an agreement in which private equity firm KKR will invest $500 million into the Redwood City, Calif firm. The investment is expected to take place in May after Box announces its quarterly results.

While Box-watchers expected a deal of some sort, many of the company’s investors were hoping that Levie and team would be forced to sell the company at an ambitious price. Most think that the chances of that happening anytime soon are slim given that KKR is expected to soon own about 11 percent of Box’s outstanding shares “after giving effect to the investment and before any share repurchases.” It is important to note that KKR is paying for preferred stock which will carry a 3 percent dividend. Morgan Stanley & Co. LLC , which Box hired as a financial advisor in 2019, provided guidance to members of Box’s board.

That relationship was formed after Levie and team became aware that corporate raider Carl Icahn’s activist hedge fund Starboard Capital had acquired 7.5 percent of Box shares in 2019. In their filing with the Securities and Exchange Commission at the time, Starboard Value called Box stock “undervalued and represents an attractive investment opportunity,” which is code for “we don’t think you run your company very well…