(Bloomberg) — Activist investor Jana Partners withdrew its plan to nominate four directors for Zendesk Inc.’s board after the software maker agreed to be acquired by a group of buyout firms led by Hellman & Friedman and Permira for about $9.5 billion.
Jana said in a filing Friday that it was withdrawing its proxy materials in connection with the company’s annual meeting. The investment firm previously said that, in the absence of that board changes it was seeking, Zendesk should be sold.
The private equity-led group buying Zendesk is paying $77.50 a share in an all-cash transaction announced earlier Friday. That represents a 34% premium over Zendesk’s closing stock price on Thursday, the company said in a statement. Including debt, the deal is valued at about $10.2 billion.
Zendesk’s shares rose 30% to close at $74.17 Friday, giving the company a market value of almost $9.1 billion.
The announcement came after Zendesk said earlier this month that it would remain independent after failing to find a potential buyer.
Financing Difficulties
The San Francisco-based company said June 9 that it would no longer seek to sell itself after a strategic review that reached out to 16 potential strategic partners and 10 financial sponsors. Ultimately, “no actionable proposals were submitted,” Zendesk said in a statement at the time, and final bidders cited “adverse market conditions and financing difficulties at the end of the process.”
In February, Zendesk received an unsolicited takeover offer from buyout firms that valued the company at $127 to $132 a share. Those firms included Hellman & Friedman, Advent International and Permira, Bloomberg reported. That offer came a few weeks before Zendesk dropped its effort to buy SurveyMonkey’s parent, Momentive Global Inc., saying it failed to garner the necessary support from its shareholders to go through with the acquisition.
The lower price Zendesk ultimately accepted reflects how the company’s business momentum and long-term outlook has changed since February, according to people familiar with the matter, who asked to not be identified because the details are private.
The buyout firms also didn’t have as good a grasp on Zendesk’s prospects when they made their offer in February, as the bid was based on publicly available information, the people said. They only got to look at Zendesk’s books after the Momentive deal died and it began talking with other suitors, they said.
New Offer
The new offer started coming together about a week ago, when Hellman & Friedman and Permira came back with a fully financed bid and the parties hammered out the latest price, the people added.
Representatives for Zendesk and Hellman & Friedman declined to comment on how the deal came together.
Zendesk had agreed to buy Momentive in October in an all-stock transaction valued at roughly $4 billion at the time. The transaction was met with a dramatic sell-off in both companies as investors balked at the tie-up. Zendesk shareholder Janus Henderson Group Plc came out against the acquisition, as did Jana Partners.
Zendesk, which makes customer service software, had said it would gain from Momentive’s market research products. The shares had declined 51% since the deal was announced Oct. 28 through Thursday.
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