Zendesk Closes $10.2 billion All-cash Acquisition After Soared Over 60 percent on Buyout Deal Talk

Zendesk closed a $10.2 billion all-cash acquisition deal with a group of buyout firms led by Hellman & Friedman LLC and Permira as rumored Thursday after market. Under the terms of the agreement, Zendesk stockholders will receive $77.50 a share, a roughly 34% premium to Thursday’s closing price of $57.95. Premarket $ZEN soared as high as $91, the stock had soared after hours Thursday after the WSJ reported that it was “close to a deal with a group of buyout firms, according to people familiar with the matter, resurrecting a failed attempt to sell itself in what would be one of the biggest private-equity takeovers of the year.”

The rumored group that includes Hellman & Friedman LLC and Permira. The deal could be probably struck in the coming days assuming the talks don’t fall apart, the people said. The price couldn’t be learned.

Update: On Friday morning Zendesk Inc. closed a $10.2 billion all-cash acquisition deal with a group of buyout firms led by Hellman & Friedman LLC and Permira.

Under the terms of the agreement, Zendesk stockholders will receive $77.50 a share, a roughly 34% premium to Thursday’s closing price of $57.95.

Earlier this year, Zendesk turned down a $17 billion offer to sell the company, which angered activist investor Jana Partners LLC. CEO Mikkel Svane, who built Zendesk from scratch got an offer from a consortium of private equity firms which The Journal reported at the time included Hellman & Friedman, Advent International Corp. and Permira. It is easy to imagine why he did not want to sell as he believed that the deal undervalued the company.

Moving o,n Zendesk earlier this month said it would stay independent after holding talks with potential buyers as choppiness in financing markets makes it harder to finance deals. $ZEN had been expected to come to an agreement with Jana after the company ended a bid to sell itself in a private-equity auction, The Wall Street Journal reported last week. Zendesk and Jana were discussing a truce that could involve Mikkel Svane stepping down as the software company’s chief executive, as well as changes to the board including the removal of director Carl Bass. It is not clear where Zendesk’s discussions with Jana stand in light of the expected buyout deal

Last year $ZEN announced that it would buy Momentive (SurveyMonkey) for more than $4 billion and has been in a nasty fight since. Zendesk believed it was a way to drive revenue growth and push the company from purely help desk-related tasks and, to a smaller degree CRM into the customer experience market. Zendesk suggested in an investor presentation that the deal could help it grow revenue from around $1.39 billion, the run rate it was at in November 2021, to $3.5 billion by 2024, which Zendesk emphasized was ahead of schedule. In the end Zendesk’s shareholders subsequently voted down its planned acquisition of SurveyMonkey-parent Momentive Global Inc., forcing the company to abandon the deal.

Jana wasn’t happy with Zendesk ignoring Jana’s increasingly stringent demands outlined in letters to the company and in public statements. That includes this week’s threat of a lawsuit if Zendesk failed to call a stockholder meeting immediately.

About Zendesk

Zendesk is a service-first CRM company that builds software designed to improve customer relationships. Zendesk specializes in helping companies with customer communications and said on its website it had over 160,000 paid accounts and roughly 5,450 employees. It was founded in 2007 and is based in San Francisco.

Permira and Hellman & Friedman

With offices in San Francisco, New York and London, Hellman & Friedman manages about $90 billion.

Permira manages more than €60 billion, equivalent to about $63 billion, according to its website.

Source: WSJ ZenDesk

From The TradersCommunity US News Desk