Box Inc. today revealed plans to raise $500 million from investment firm KKR & Co. Inc. and said it will use the funds to buy back shares.

The news ignited a selloff that sent the cloud file storage provider’s share price plummeting more than 10% at one point. Box closed at $22 a share, 9.4% lower than where it traded prior to the announcement.

According to analysts who spoke to Reuters, one factor behind the share price drop was that some investors were hoping Box would announce a sale rather than an investment. It’s believed that the capital injection from KKR may lower the chance of a sale happening.

The possibility of Box being acquired was first floated last month, when another Reuters report cited sources as saying that the company had begun exploring strategic alternatives. According to those sources, the cloud file storage provider held talks with multiple companies and private equity firms about a potential sale. The discussions are said to have followed pressure from activist investor Starboard Value, which had called on Box to take “additional steps” to boost shareholder value. 

The KKR investment represents a high-profile endorsement of Box’s ability to drive shareholder value that could help it address the investor pressure more effectively. “The investment from KKR is a strong vote of confidence in our vision, strategy, and continued efforts to increase growth and profitability,” Box Chief Executive Officer Aaron Levie (pictured) said in a statement. “KKR is one of the world’s leading technology investors with a deep understanding of our market and a proven track record of partnering successfully with companies to create value and drive growth.”

In a step that could help the company drive further investor support, Box will use the $500 million investment to launch a share repurchase. It plans to carry out the buyback after its earnings report in May via a type of sale known as a Dutch auction. 

Also in May, independent director Bethany Mayer is set to replace Levie as board chair. Mayer is the former CEO of Ixia Inc., a publicly traded maker of technology for monitoring enterprise networks that was acquired by Keysight Technologies Inc. for $1.6 billion in 2017.

“After undertaking a comprehensive review of a wide range of strategic options, the Board unanimously determined that continuing to execute Box’s long-term strategy in combination with a significant share repurchase and the support of KKR, is the optimal path to drive the company’s next phase of growth,” said Dana Evan, the lead independent director on the Box board.

Box competes with Dropbox Inc. and tech giants such as Google LLC in the cloud file storage market. It also has a presence in a number of adjacent segments, including collaboration and document security.

Photo: The Demo Conference/Flickr