Zendesk is set to be acquired for approximately $10.2 billion by several global investment firms, nearly half of what it was originally offered for the company in February 2022.
The acquisition was revealed last Friday and led by global investment firms Permira and Hellman & Friedman, as well as an investor group that includes a wholly-owned subsidiary of the Abu Dhabi Investment Authority, and Singapore’s sovereign wealth fund GIC.
Under the terms of the agreement, Zendesk shareholders will receive $77.50 per share. The company said this was a premium of around 34% over its closing stock price on 23 June, 2022.
However, earlier in June the company decided it would remain independent after failing to find a buyer. It said on 9 June it carried out a strategic review which included 16 potential strategic partners and 10 financial sponsors. In the end, no actionable proposals were submitted, with the final bidders citing adverse market conditions and financing difficulties at the end of the process.
On 10 February, the company reviewed and rejected an unsolicited, non-binding proposal from a consortium of private equity firms to acquire all of Zendesk’s outstanding shares in a transaction valued at $127-$132 per share. The firms included Hellman & Friedman, Advent International and Permira, Bloomberg reported. The board concluded that the proposal significantly undervalued the company and wasn’t in its best interests.
The offer came a few weeks before Zendesk’s intended acquisition of SurveyMonkey’s parent, Momentive Global, fell through. The company had been interested in acquiring the market research firm since October 2021, when it offered $4 billion to do so. The news wasn’t met well by investors in both companies who began selling off shares. The company’s share price has declined by around 50% over the past year.
The lower price Zendesk accepted for the takeover reflects how the company’s business momentum and long-term outlook have changed since February, said people familiar with the matter, as reported by Bloomberg.
The buyout firms reportedly didn’t have a good grasp on Zendesk's prospects when they made their offer in February, as the bid was based on publicly available information. They were only able to examine Zendesk’s accounts once the Momentive deal died and it began talking with other suitors.
The new offer was put together around a week ago when Hellman & Friedman and Permira came back with a fully financed bid and the parties worked out the latest price.
The transaction has been unanimously approved by Zendesk’s Board of Directors and is expected to close in the fourth quarter of this year, subject to customary closing conditions including stockholder approval. Upon closing of the transaction, Zendesk will operate as a privately-held company.
“This is the start of a new chapter for Zendesk with partners that are aligned with the strength of our agile products and talented team, and are committed to providing the resources and expertise to continue our growth trajectory,” said Mikkel Svane, founder, chairman and CEO of Zendesk. “With Hellman & Friedman and Permira’s support, we’ll continue to execute on our long-term strategy with our customers as our top priority, taking full advantage of the opportunity we see to help businesses navigate the ever-changing expectations and demands of their customers.”
