Activist Calls for Zendesk to Scrap Momentive Deal

Activist trader Jana Partners has stepped up its campaign to derail client-provider system Zendesk’s proposed acquisition of the dad or mum of world wide web-study corporation SurveyMonkey.

Jana, which owns a massive stake in Zendesk, to start with objected in November to the acquisition of Momentive International, expressing it “lacks economic advantage, has questionable strategic logic, and introduces a superior diploma of execution hazard for Zendesk shareholders.”

In a Jan. 3 letter to the Zendesk, Jana explained the company’s Dec. 6 proxy assertion looking for shareholder approval of the offer had raised new issues that “make it even much more evident that the proposed acquisition is the wrong preference for Zendesk and its shareholders.”

“Rather than throwing away much more time and much more shareholder cash on a value-destroying acquisition that is destined to be turned down by shareholders, the board really should quickly terminate the transaction and pivot to concentrating on considerably much more promising avenues to solve Zendesk’s developing price reduction to honest value,” the letter urged.

Zendesk agreed to in Oct to purchase Momentive in an all-inventory offer that at the time was value about $four.1 billion. The companies have explained that by combining, they could enable companies get greater feed-back from shoppers.

Momentive shareholders would obtain .225 Zendesk share for each Momentive share but the offer is now value $22.1o for each share when compared with $28 when it was introduced.

Citing the proxy assertion, Jana explained in its letter that the offer “appears to be a reactive and impulsive conclusion, created only in reaction to outreach by Momentive’s advisers as part of a broad sale process at the stop of August 2021, somewhat than the merchandise of a perfectly-believed-out system.”

Moreover, as disclosed in the proxy, “the Momentive acquisition is justified by assuming the whole realization of profits synergies that, if achieved, would incorporate a meager 1% to Zendesk’s topline expansion rate.”

“It is incomprehensible how this de minimis probable reward to expansion and value could justify the monumental integration hazard of executing Zendesk’s to start with-ever massive acquisition (by a factor of ~50x) with a administration group with new/unproven executives,” Jana explained.

Zendesk and Momentive have each independently scheduled a special assembly of their respective stockholders to be held on February twenty five, 2022, to approve the transaction.

activist investorJana Partners, Momentive International, surveymonkey, Zendesk