Starboard Value Takes Stake in Knife River to Force Sale

Starboard Value has acquired a significant stake in Knife River, a construction materials producer and contractor, to push for improved earnings before interest, tax, depreciation, and amortization (Ebitda) margins. The activist hedge fund is demanding that Knife River align its margins with industry peers or explore strategic alternatives, including a potential sale of the company.

Knife River has faced a difficult year, with its stock price declining nearly 30%. The stock fell more than 7% on Wednesday after the company warned of headwinds, specifically citing higher fuel costs and delayed jobs. Starboard argues that the 2023 spin-off of Knife River from MDU Resources Group failed to deliver meaningful financial improvements.

Currently, Knife River reports margins of approximately 15%, which Starboard contends is far below the roughly 30% margins maintained by competitors Vulcan and Martin Marietta.