Business software maker Progress Software Corp. (PRGS) said Monday that one of its largest shareholders, Starboard Value and Opportunity Master Fund Ltd., has informed that it is withdrawing its slate of nominees for election to the company’s board of directors at the annual meeting of shareholders.
As a result of Starboard’s withdrawal of its candidates, Progress Software urged its shareholders who have previously voted the Starboard proxy to ensure that their shares are cast for the company’s director candidates at the annual meeting of shareholders on May 31.
The Bedford, Massachusetts-based company said its board of directors and management team are dedicated to the implementation of the new strategic plan announced on April 25.
In a statement, Progress Software said, “Starboard’s withdrawal of its nominees demonstrates its support of our strategic plan and confidence in our Board to help oversee its execution. We appreciate the positive and constructive feedback and valuable insights we received from Starboard and our other shareholders.”
Starboard currently owns about 5.2 percent of the outstanding shares of Progress Software. Earlier in the day, the New York-based investment adviser said it delivered a letter to Jay Bhatt, President and CEO of Progress Software, expressing appreciation of its productive relationship with the company’s management as well as board.
Starboard said that Progress Software’s strategic plan, announced in late April, addressed many of Starboard’s previously outlined concerns. The activist hedge fund also said it withdrawing its proxy contest in order to allow Progress Software’s management to singularly focus on execution of the strategic plan, calling it “a large step in the right direction”.
Further, Starboard said it strongly advised the management of Progress Software to refrain from making any acquisitions until the company has successfully executed the strategic plan and is no longer undervalued by the stock market.
Previously, Starboard had urged other shareholders of Progress Software to elect its three qualified nominees, Dale Fuller, Jeffrey Smith and Edward Terino, in place of the company’s incumbent directors – Michael Mark, David Krall, and Ram Gupta – at the annual shareholder meeting.
Starboard had earlier said that Progress Software was deeply undervalued due to the company’s deteriorating operating performance, persistent and increasing losses in its Enterprise Business Solutions or EBS business, declining revenue growth, and conglomerate structure of three unrelated business units with disparate profitability and growth prospects.
In April, Progress Software revealed new restructuring plans to divest ten of its non-core product lines by the middle to end of fiscal 2013, and layoff about 10 to 15 percent of its total workforce as part of efforts to improve its profitability. The company also authorized a $350 million share repurchase program as part of its restructuring.
In late March, Progress Software reported a 64 percent decline in first-quarter profit as its software license revenues continued to drop while expenses increased. The company’s financial chief Charles Wagner announced his resignation at that time.