As Elinor Arbel writes at TheStreet.com, trillion-dollar hedge fund BlackRock now owns about 13.5 percent of Israel-based security-software concern Aladdin Knowledge Systems.
Considered a leader in the software digital rights management (DRM) market, the company’s financial performance has faltered in recent quarters. Sales have slowed, with many analysts blaming volatile management rather than weakening market demand for the slide.
All of which has increased the speculation, if not the likelihood, that BlackRock might intervene to overhaul Aladdin’s executive management.
The time is right for a change at the top at Aladdin. The company has suffered vertiginous turnover in recent quarters — never a hallmark of organizational stability or a harmonious corporate culture — and OEM and licensing agreements with VeriSign and RSA Security (now part of EMC) were discontinued or severely modified so as to make them "insignificant to the bottom line," according to Ehud Eisenstein, an analyst at Oscar Gruss.
Perhaps BlackRock will do more than push for a change in executive management. It might make a serious bid to take Aladdin private or to sell the company to a larger public player assembling an end-to-end security product portfolio during the current wave of market consolidation.
In the past, Aladdin’s founding brothers, Yanki and Dany Margalit, sought to control nearly every aspect of the business. Their hold on power is easing, however, with new managers ascending the corporate hierarchy and influential investors such as BlackRock pushing aggressively to hasten the pace of change.
A shakeup of the company’s relatively clubby board could be next.