(Bloomberg) -- Jana Partners has taken a position in Trimble Inc. and is urging the software company to avoid more large acquisitions.
The activist investor wants Trimble to instead focus on organic growth in its existing businesses, Jana partner Kevin Galligan said Monday at the Bloomberg Activism Forum. Jana is also calling on the company to improve margins and returns on capital, as well as to streamline its business.
Jana said Trimble might be an attractive takeover target for larger industrial companies including many that are looking to increase exposure for recurring software and technology-enabled services, Galligan said.
A representative for Trimble didn’t immediately respond to requests for comment.
Trimble, based in Westminster, Colorado, provides location-based software solutions to corporate customers. The company’s shares, which had fallen about 17% in the past year, rose as much as 3.9% on Monday. They closed up 2.4% to $48.05 in New York trading, giving Trimble a market value of about $12 billion.
The company trades at a “significant discount” to peers because of its operational complexity and a history of paying high prices for large acquisitions, Jana contends.
Trimble’s acquisitions have included the $2 billion deal, completed in April, to buy Transporeon GmbH from private equity firm Hg Capital.
A sale of Trimble could value the company at double its current stock price, at up to $94 a share, or $23.4 billion in market value, according to a report published in November by Goldman Sachs Group Inc. That price would reflect 6.5 times estimated sales in 2024, analysts led by Jerry Revich wrote.
Jana Partners has a history of calling for sales of companies such as, most recently, Frontier Communications Parent Inc. It’s urging Frontier to consider a strategic review to evaluate a potential sale or an asset divestiture to become a pure-play fiber provider, according to a letter this month.
(Updates with share gain in fifth paragraph)
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