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Jana Partners Builds Vonage Stake After Review Ends

The New York-based hedge fund run by Barry Rosenstein said in a regulatory filing Monday that it has built a 2.3% stake in Vonage.

Jana believes the company is undervalued, the people said, asking not to be identified because the matter is private. The new position was reported earlier by Bloomberg News.

While the type of changes Jana is seeking couldn’t be determined, the activist investor has a history of pushing for breakups or sales of companies, including most recently with its investments in Laboratory Corp. of America Holdings and Encompass Health Corp. Both LabCorp and Encompass are conducting strategic reviews.

Vonage’s shares rose as much as 7.1% Monday. They closed up 2.8% to $13.45 in New York trading, giving the company a market value of $3.38 billion and making Jana’s stake worth about $78 million.A representative for Jana declined to comment. A representative for Vonage wasn’t immediately available for comment.

Jana also disclosed a new, smaller position in CyrusOne Inc. that is valued at about $37 million, Monday’s filing shows.

In 2019, Vonage was targeted by another activist investor. Its agreement then with Legion Partners Asset Management resulted in a new director being appointed to its board.

Vonage, based in Holmdel, New Jersey, provides unified communications, contact centers and programmable communications APIs for its clients, according to its website. APIs, or application programming interface software, are what allow apps to work with each other.

Vonage announced in February it was terminating the 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.

Vonage’s API business is likely worth more than the entire company, according to an estimate by Ryan MacWilliams, an analyst with Stephens Inc. He said the API business alone could have an enterprise value of as much as $4.8 billion in his sum-of-the-parts analysis. Its contact center business could be worth up to $437 million, while its remaining unified communications business could be worth $1.1 billion in such a scenario, he said.

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