Activist Jana ends proxy battle after Zendesk sale announcement

Jun. 24, 2022 9:46 PM ETZendesk, Inc. (ZEN)CTXSBy: Joshua Fineman, SA News Editor3 Comments

Zendesk sign at company headquarters in Silicon Valley

Michael Vi/iStock Editorial via Getty Images

Activist investor Jana Partners withdrew its four nominees for the Zendesk (NYSE:ZEN) board after the customer-support software company agreed to be sold to a private equity consortium for $77.50/share.

Jana disclosed it was withdrawing its nominees in a filing late Friday. Zendesk earlier Friday agreed to be sold to an investor group led by private equity firms Permira and Hellman & Friedman for $10.2 billion.

Activist investor Jana Partners has been pushing ZEN to add Jana board members or sell itself for months. Jana, which initially called for Zendesk to terminate its now cancelled purchase of SurveyMonkey parent Momentive (MNTV) back in late November, in February nominated four directors to ZEN's board.

Jana's decision to end its proxy fight comes after the WSJ reported last Tuesday that Zendesk (ZEN) was said to be holding talks to settle differences between the company and Jana that could include the departure of Chief Executive Mikke Svane.

The Zendesk sale announcement on Friday followed the company June 9 saying it would remain independent following a strategic review of its options. In February, Zendesk (ZEN) rejected a private-equity offer to acquire the company for between $127 and $132 a share, which Bloomberg reported in February included Hellman & Friedman, Advent and Permira.

Some investors on Friday appeared to be disappointed by the $77.50/share price in light of the rejected February bid and there was some investors who thought that Jana may be opposed to the deal. The Jana news on Friday evening seems to put that theory to bed.

The lower price accepted for the deal reflects how Zendesk's business and long-term outlook has changed since February, according to a Bloomberg report, which cited people familiar. The original offer also appeared to be based solely on publicly available material, before due diligence was conducted.

The latest deal for Zendesk began coming together about a week ago, when Hellman & Friedman and Permira came to the table with a fully financed bid, according to Bloomberg.

Zendesk holder Zendesk holder Janus Henderson, who also came out against Zendesk's acquisition of Momentive, declined to comment to Seeking Alpha on if it would support the sale or not. Janus Henderson is one of ZEN's biggest holders with a 6.1% stake as of March 31.

Citrix Systems (CTXS), which agreed to be sold to PE firms for $16.5 billion in late January, fell 1.9% on Friday amid the Zendesk (ZEN) sale news as some investors in leveraged buyout deals are worried that other transaction prices could be cut due to the current volatile stock market and economy.

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