Activist Jana steps up push for Zendesk to drop deal for Momentive Global

Momentive Global

03/01/2022 18:30

By Svea Herbst-Bayliss
    BOSTON, Jan 3 (Reuters) - Activist investor Jana Partners is
increasing pressure on customer service platform Zendesk  ZEN.N 
to drop plans to buy Momentive Global  MNTV.O , the parent of
SurveyMonkey, arguing the deal is too expensive and that
shareholders oppose it.
    Jana said new documents show that the acquisition of
Momentive https://www.reuters.com/technology/software-services-firm-zendesk-buy-surveymonkey-parent-nearly-4-bln-2021-10-28
 appears to have been made only after Momentive's advisors
reached out to Zendesk at the end of August 2021. Jana wrote in
a letter to the board, seen by Reuters, that it does not appear
to be part of a long-considered strategy.
    The New York based firm, which is a top 10 shareholder in
Zendesk, also criticized Zendesk's plans to issue equity with a
fair value of roughly $6 billion to Momentive shareholders to
consummate the deal, the letter said.
    Zendesk agreed in late October to buy Momentive in an
all-stock deal, which at the time was valued at nearly $4
billion.
    A representative for Zendesk was not immediately available
for comment.
    Zendesk chose to issue the equity at an "artificially
depressed price" before reporting strong earnings, the letter
said. Jana cites Zendesk's financial advisor, Goldman Sachs, who
calculated Zendesk's fair value at $176 a share, which compares
to $103 per share in early trading on Monday. 
    Jana also believes even if all goes well with a deal, the
payoff would be slim, writing it would add a "meager 1% to
Zendesk's top line growth and about 10% to (its) future stock
price"
    "Zendesk's proposed acquisition of Momentive appears to be a
reactive and impulsive decision," the letter said. Jana said it 
wants Zendesk to stop wasting time and money on a deal that it
expects shareholders to reject and urged the board to
"immediately terminate the transaction and pivot to focusing on
far more promising avenues to resolve Zendesk’s growing
discount." 
    Jana wrote the letter after Zendesk filed its preliminary
proxy in early December and roughly one month after the
investment firm first pushed the board to scuttle the deal.
    Both Zendesk and Momentive investors would have to agree to
the deal. The vote is expected to occur in late February or
early March.
    Jana Partners said it has been in touch with more 
shareholders and wrote on Monday, "It should now be glaringly
obvious to Zendesk's board that shareholders do not support the
proposed acquisition."     

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Jana Partners urges Zendesk to scrap takeover deal for
SurveyMonkey parent     urn:newsml:reuters.com:*:nL4N2SL42V
Software services firm Zendesk to buy SurveyMonkey parent for
nearly $4 bln     urn:newsml:reuters.com:*:nL4N2RO5WH
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Svea Herbst-Bayliss
Editing by Nick Zieminski)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))