As Allot’s stock slides, shareholders seek board changes

Will activist investors bring about a change in the composition of the board of the company for network intelligence and security solutions Assign (TASE: EVERYTHING; Nasdaq: EVERYTHING)? A report from the largest shareholder in the company to the US Securities and Exchange Commission (SEC) states that discussions are ongoing between the company and its investors about changes in the board, at the request of one of the investors.

The largest shareholder in Allot is the New York-based investment management company Lynrock Lake, which became a shareholder in 2018 and now has a 21.8% stake, worth $ 67.6 million. According to the report, a meeting took place between Lynrock Lake’s founder and investment manager Cynthia Paul and an Allot director to discuss the board’s composition and value creation for shareholders, and discussions are expected to continue.

Allot, led by CEO Erez Antebi and chaired by Yigal Jacoby, who co-founded Allot in 1996, provides telecommunications companies with network and analytics and security solutions as a service (SECaaS). The company is traded on the Nasdaq and Tel Aviv stock exchanges at a market capitalization of $ 310 million, after a 47% decline in the share price over the past year. The share price is 58% below the peak it reached in June 2021.

One year ago, Outerbridge Capital Management, also in New York, bought shares in Allot at prices ranging between $ 14 and $ 19 per share, as well as options. The current stock price is $ 8.39. The company, which now owns 7.8% of the company, said at the time that it was undervalued.

In another report a few months ago, Outerbridge expressed satisfaction with Allot’s efforts in cybersecurity and said that Allot is addressing a significant market. Towards the end of last year, in another report, Outerbridge said that despite the price drop, it was encouraged by the pace at which Allot won new contracts, adding that the company was significantly undervalued and therefore planned to hold discussions with management and the board, including on the composition of the board and on increasing value creation for shareholders.

Last month, Outerbridge reported that meetings had taken place with Allot’s management and board and that after them they had sent a letter to the board stating that they supported the CEO and management team, but that they were concerned about the measures taken by the board. the company, including raising capital that diluted existing shareholders (a $ 40 million private placement with Lynrock Lake in February this year) and the company’s inability to provide value to shareholders in previous years.

The letter states that the company believes that Allot’s share is dramatically undervalued, and that the SECaaS business alone is worth a share price of 10-15 dollars, while Allot’s traditional business (DPI – deep packet inspection) is worth another 10-15 dollars. In other words, the stock price should be $ 20-35. The company believes that the fact that the share price is significantly lower indicates a lack of confidence in the company’s board. It therefore proposes that a board member represent the shareholders. As mentioned, according to Lynrock Lake’s archives, discussions are ongoing on the matter.

No comment was received from Allot.

Published by Globes, Israel business news – – on March 31, 2022.

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