Engaged Capital Sends 220 Demand Letter to BlackLine, Inc.
Seeks Access to Board and Strategic Committee Records Related to All Inbound Acquisition Interest, Including Reported $66 Per Share Offer from SAP
Raises Concerns About Strategic Committee's Inadequate Stewardship and the Board's Failure to Act in Stockholders' Best Interests
Findings Will Inform Decision to Nominate Director Candidates at the 2026 Annual Meeting
Engaged Capital, LLC ("Engaged"), an investment firm specializing in enhancing the value of small- and mid-cap North American companies, today announced that it submitted a demand, pursuant to Section 220 of the Delaware General Corporation Law, to BlackLine, Inc. (NASDAQ:BL) ("BlackLine" or the "Company") to inspect books and records relating to the Company's Board of Directors' (the "Board") handling of multiple acquisition offers, including an actionable $66 per share acquisition offer from SAP SE and the formation and activities of the Board's Strategic Committee.
Engaged's demand follows a pattern of poor stockholder engagement by BlackLine and the Company's sustained underperformance relative to software peers. The firm believes these issues, combined with the lack of disclosure regarding the Strategic Committee's mandate and process, raise serious questions about the Board's oversight of potential strategic opportunities. The full text of the letter can be found below.
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November 21, 2025
BlackLine, Inc.
21300 Victory Boulevard, 12th Floor
Woodland Hills, CA 91367
Attn: Karole Morgan-Prager
Chief Legal and Administrative Officer and Secretary
Dear Ms. Morgan-Prager:
Engaged Capital Flagship Master Fund, LP, an exempted limited partnership organized under the laws of the Cayman Islands ("Engaged Capital Flagship Master" or the "Stockholder"), is the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of 1,201,027 shares of common stock, par value $0.01 per share (the "Common Stock"), of BlackLine, Inc., a Delaware corporation ("BlackLine" or the "Company"), including 100 shares of which are held in record name by the Stockholder, as of the date hereof.
Engaged Capital Flagship Master is deeply concerned regarding recent actions of the Company's Board of Directors (the "Board") in the face of credible news reports published by Bloomberg and Reuters in October 2025 concerning an actionable offer from SAP SE ("SAP") to buy the Company for nearly $4.5 billion. According to news reports, SAP submitted a formal, non-public offer to acquire the Company for $66 per share on June 18, 2025 (an 18% premium to the closing stock price on such date), but the Board wasn't interested in a deal and rejected the offer.
On October 30, 2025, we wrote a public letter to the Board calling on it to immediately engage financial advisors and proactively run a strategic alternatives process to maximize value for stockholders. We took this course of action because while we typically prefer private dialogue, our experience has been that meaningful engagement with the Company has proven extremely challenging due to the Company's general lack of responsiveness and insistence on making meetings difficult to schedule. We understand many other stockholders have experienced a similar lack of engagement.
This concern was proven by the Form 8-K filed by the Company on November 10, 2025, which states in full, "In response to investor inquiry, on November 10, 2025 Blackline, Inc. disclosed that it has maintained an independent strategic committee of the board of directors (the "Strategic Committee") for more than a year. Current members of the Strategic Committee are David Henshall, who is serving as Chairperson, Greg Hughes, and Tom Unterman." The Stockholder notes that Messrs. Henshall and Unterman are Class I directors whose terms expire at the Company's 2026 annual meeting of stockholders (the "2026 Annual Meeting").
On November 13, 2025, Citizens disclosed in an analyst report that the Company's Chairman and CEO, Owen Ryan, commented at an investor lunch held in New York City on November 12, 2025 that the Strategic Committee "was first formed about four years ago." This is consistent with our understanding based on discussions with market participants that SAP had made a previous offer to acquire the Company several years prior to the reported June 18, 2025 offer.
The Company's disclosure on November 10th hardly addresses the concerns expressed in our October 30th letter. It lacks the most basic information, including when the Strategic Committee was formed, the purpose of the Strategic Committee, the scope of the Strategic Committee's authority and whether the Strategic Committee has retained advisors. This, together with the Company's sustained and dramatic underperformance compared to relevant software indices, suggests that the Board has mismanaged whatever strategic process, if any, has taken place. The lack of information provided by the Company makes it impossible to determine whether Board members have adequately carried out their fiduciary duties in connection with the reported offer from SAP and any process overseen by the Strategic Committee.
As the record holder of shares of Common Stock, the Stockholder hereby demands, through its counsel, pursuant to Section 220 of the Delaware General Corporation Law ("Section 220" and the "DGCL") during the usual hours for business to inspect the following books, records and documents of the Company and to make and/or receive copies or extracts therefrom regarding:
1. Minutes of any meeting of the Board or any committee of the Board, including the Strategic Committee, and records of any action of the Board or any such committee during the Relevant Time Period1 relating to the following topics:
- The formation and charter of the Strategic Committee referenced in the Company's November 10, 2025 Form 8-K;
- The Board's evaluation and determination of which directors should be appointed to the Strategic Committee;
- The membership of the Strategic Committee since its inception;
- The offer(s) from SAP and any Board evaluation and response thereto, and any subsequent communication with SAP regarding a potential strategic transaction;
- The process followed by the Strategic Committee in connection with the SAP offer(s), and other offers, indications of interest and any other potential strategic transactions considered by the Board; and
- The evaluation of all materials provided by advisors to the Board or Strategic Committee regarding their analysis of the offer(s) from SAP and other potential strategic transactions.
2. Board Materials2 provided to the Board or any committee of the Board, including the Strategic Committee, in connection with actions taken by the Board or any such committee relating to the topics listed at 1(a)-(f) above.
According to Section 220, a "proper purpose" shall mean a purpose reasonably related to such person's interest as a stockholder. A proper purpose includes using books and records to "seek an audience with the board to discuss proposed reforms or, failing in that, they may prepare a stockholder resolution for the next annual meeting, or mount a proxy fight to elect new directors." Saito v. McKesson HBOC, Inc., 806 A2d 113, 117 (Del. 2002); see also Tactron, Inc. v. KDI Corp., 1985 WL 44694, *1 (Jan 10, 1985) (shareholder demonstrated proper purpose for inspection of books and records in context of proxy fight); High River Limited Partnership v. Forest Labs., Inc., C.A. No. 7663-ML, at 33 (Del. Ch. July 27, 2012) (TRANSCRIPT).
The purpose of this demand is to allow Engaged Capital Flagship Master to evaluate whether it should run a slate of Class I director candidates at the 2026 Annual Meeting and if so, determine the number of candidates to run, particularly since Messrs. Henshall and Unterman are Class I directors. Engaged Capital Flagship Master may also seek to engage with the Board on these matters.
The Stockholder demands that: (1) originals or attested copies of the documents and records demanded above be made available for inspection and copying by the Stockholder, its designated representatives, or its attorneys or agents during usual business hours, beginning no later than five business days after the Company receives this letter, and continuing from day to day thereafter during usual business hours until the inspection is completed, or (2) the Company deliver electronic copies of such records, within five business days after receipt of this letter, to its counsel, Adrienne Ward and Ryan Nebel, of the law firm Olshan Frome Wolosky LLP. Please advise Ms. Ward (telephone (212) 451-2368, email [email protected]), as promptly as practicable within the requisite timeframe, when the items requested above will be made available to the Stockholder and our firm for further review.
If any responsive materials have been redacted on the basis of privilege, please identify such materials and the nature of the privilege asserted. In addition, please certify that all books and records responsive to the Stockholder's demand have been produced or identify which responsive books and records have not been produced and the reasons why they were withheld. The Stockholder will enter into an appropriate confidentiality agreement regarding the documents to be inspected.
This demand complies in all respects with applicable law. If, however, the Company contends that this demand is incomplete or is otherwise deficient in any respect, please notify the Stockholder, through Ms. Ward, immediately in writing setting forth the facts that the Company contends support its position and specifying any additional information believed to be required. In the absence of such prompt notice, the Stockholder will assume that the Company agrees that this demand complies in all respects with the requirements of the DGCL.
Sincerely,
Glenn W. Welling
Founder and Chief Investment Officer
Engaged Capital, LLC
About Engaged Capital
Engaged Capital, LLC ("Engaged Capital") is an investment advisor with a private equity-like investing style in the U.S. public equity markets. Engaged Capital seeks to help build sustainable businesses that create long-term stockholder value by engaging with and bringing an owner's perspective to the managements and boards of undervalued public companies and working with them to unlock the embedded value within their businesses. Engaged Capital focuses on delivering superior, long-term, risk-adjusted returns for its limited partners. Engaged Capital was established in 2012 and is based in Newport Beach, California. Learn more at www.engagedcapital.com.
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1The "Relevant Time Period" means the period commencing on the earlier of (i) July 1, 2021 or (ii) the date of the formation of the Strategic Committee, through the present. |
2 The term "Board Materials" used herein means all minutes, consents, resolutions, or other records of any Board and/or regular or special committee (including Strategic Committee) meeting, and all documents provided, considered, discussed, prepared, or disseminated, including materials on board portals, in draft or final form, at, in connection with, in anticipation of, or as a result, of any meeting of the Board or any regular or specially created committee thereof, including, without limitation, all presentations, Board packages, recordings, agendas, summaries, memoranda, charts, transcripts, notes, minutes of meetings, drafts of minutes of meetings, exhibits distributed at meetings, or resolutions. |
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Longacre Square Partners LLC
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