(Bloomberg) — Activist investor Legion Partners Asset Management is preparing to nominate a slate of three directors to the board of SurveyMonkey parent Momentive Global Inc. as opposition mounts to its takeover by software company Zendesk Inc., according to people familiar with the matter.
Momentive has a so-called staggered board, which means only three directors — one of whom is the company’s chief executive officer –will stand for election at this year’s annual general meeting. Los-Angeles-based Legion intends to put forth a slate to replace all three because it believes the Zendesk takeover is likely to fail and the Momentive board breached its fiduciary duty by agreeing to the terms, the people said, asking not to be identified because the matter is private.
A representative for Legion declined to comment. A representative for Momentive wasn’t immediately available for comment.
The three Momentive board members whose terms expire this year include Alexander Lurie, who has been the San Mateo, California-based company’s CEO since 2016. Former Intuit Inc. CEO Brad Smith and Dana Evan of Icon Ventures are also up for election, according to a company filing.
Williams, Sandberg
Tennis star Serena Williams, who joined the board in 2017, isn’t up for re-election this year. Neither is Meta Platforms Inc. Chief Operating Officer Sheryl Sandberg, whose late husband Dave Goldberg was the CEO at SurveyMonkey when he died in 2015.
It’s the latest twist in a dramatic 24 hours for Momentive’s deal with Zendesk. Earlier Friday, two prominent shareholder advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., urged Zendesk investors to reject the transaction. While Glass Lewis recommended Momentive shareholders also vote down the deal, ISS said they should support it because of the downside risk of rejecting it.
Those reports followed news Thursday that Zendesk itself had received and turned down a takeover offer from a group of private equity firms, saying in a statement that the proposal undervalued the company. Hellman & Friedman, Advent International and Permira made up the group that made the offer, Bloomberg News reported.
Zendesk agreed to acquire Momentive in an all-stock deal in October that was valued at about $4 billion at the time. A dramatic sell-off in the shares of both companies followed, sinking the value of the transaction to about $3.4 billion prior to Zendesk’s announcement Thursday of the takeover approach.
‘Clearly Flawed’
Legion, which owns a 1.4% stake in Momentive, had pushed the company last year to explore a sale. It immediately came out against the Zendesk transaction after it was announced because of questions about the deal’s structure and “serious concerns” about the review process that led to what Legion called Momentive’s “clearly flawed decision.”
Momentive later disclosed in a regulatory filing that it had interest from at least two other buyers who were offering cash rather than shares. According to the filing, one the parties was offering $27 a share for the company, and was open to bumping its offer by 25 cents. Instead, the company decided to pursue an all-stock deal with Zendesk valued at about $28 a share at time, which is now valued at about $25.89 a share.
Permira was also one of the potential suitors for Momentive, Bloomberg News reported at the time.
(Updates with directors in fourth paragraph)
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