Engine Capital urges EPAM to speed buybacks or consider sale

Activist fund Engine Capital, which owns about 1.5% of EPAM Systems, asked the company’s board to repurchase between 60% and 80% of outstanding shares by the end of 2028. The investor proposed using EPAM’s roughly $750 million cash balance, future free cash flow and additional borrowing capacity to fund large-scale buybacks and urged a rapid acceleration of the existing repurchase program to lift per-share metrics.

In a letter to the board, Engine’s managing member Arnaud Ajdler wrote that EPAM’s stock has fallen more than 40% this year and described the company as a “relative loser” compared with peers. Engine said aggressive repurchases could materially reduce the public float and raise earnings and cash-flow per share.

Engine requested that if buybacks fail to improve shareholder returns, EPAM should launch a formal strategic review overseen by independent directors and supported by an external financial adviser. A potential sale of the company should be included among the options in that review, the investor wrote.

The fund also called for governance changes, including adding independent directors and creating a dedicated capital allocation committee to oversee future decisions on dividends, repurchases and mergers and acquisitions.

EPAM is based in Newtown, Pennsylvania, and has a market value near $6.1 billion. The disclosure of Engine’s campaign coincided with about a 3.5% rise in EPAM shares on the day the investor revealed its position. The company and its board have not publicly responded to Engine’s proposals.

EPAM’s shares have fallen alongside other technology and software stocks this year amid investor concern that artificial intelligence could alter demand for traditional IT services. Engine contends EPAM’s decline is steeper than that of comparable firms and that a substantial buyback or a sale process would show whether different ownership or capital-allocation approaches would produce better returns for shareholders.