Zendesk has been having some issues with its investors lately.
Last month, it turned down a $17 billion takeover offer from a consortium of private equity investors, saying the deal undervalued the company. Later in the month, unhappy investors rejected the company’s $4.1 billion acquisition offer for the parent company of SurveyMonkey, Momentive.
That’s a lot of turbulence for any company to be dealing with in such a short time, but yesterday, activist investor Jana Partners, which owns 2.5% of the company’s stock, piled on with an SEC filing that wasn’t terribly friendly.
In a no-holds-barred filing, the firm put Zendesk management on notice that it wasn’t pleased at all, and said it was nominating four candidates for election to Zendesk’s board of directors at the company’s 2022 shareholder meeting.
“We believe the Zendesk Board of Directors’ (the “Board”) misguided attempt to acquire Momentive Global Inc. (“Momentive”) exposed the Board’s blatant disregard for stockholders and ongoing failures of oversight. Absent meaningful change to the Board, we believe Zendesk will fail to achieve its potential and suffer a persistent valuation discount – with stockholders left paying the price,” Jana wrote in the filing.
Jana’s filing comes after a slew of public letters and a presentation in which it questioned the Momentive deal and urged Zendesk management to cancel the acquisition.
At the time of the $17 billion takeover offer, we ran an analysis of Zendesk’s financials. Momentive, in spite of investor objections, would have sped up growth, but even without it, the company was on track to do just fine, so much so that $17 billion seemed like a low-ball offer.
Our argument was simple: The offer to buy the company was worth a somewhat-slim 30% premium on its market value, and with accelerating revenue growth in recent quarters, Zendesk had a credible growth story under its belt.