May 25, 2022

Zendesk is ready Lately I have had some problems with my investors.

Last month it turned down a $17 billion takeover bid from a consortium of private investors because the deal undermined the company. Later that month, disgruntled investors turned down the company’s offer to acquire parent company SurveyMonkey Momentive for $4.1 billion.

It’s a lot of turbulence for any company to deal with in such a short period of time, but yesterday active investor Jana Partners, who owns a 2.5% stake in the company, filed a not-so-favorable filing with the SEC.

In an unrestricted solicitation, the company told Zendesk management it was not satisfied at all and said it would nominate four candidates to be elected to the Zendesk board of directors at the company’s 2022 shareholder meeting.

“We acknowledge that the Board of Directors of Zendesk (the “Board”) of Momentive Global Inc. (“Momentive”), exposed the Board’s gross disregard for shareholders, and exercised continuous and unsuccessful oversight. We believe that without a meaningful change in the board of directors, Zendesk will not be able to realize its potential and will face permanent discounts on valuation, and shareholders will pay the price, ”Jana wrote in a statement.

Yang’s bid came after several public letters and a presentation in which he questioned the Momentiv deal and urged Zendesk management to cancel the acquisition.

During the $17 billion acquisition offer, we analyzed Zendesk’s financial data. Momentive may have spurred growth over investor objections, but even without it, the company was on the right track, so much so that the $17 billion offer seemed underpriced.

Our reasoning was simple: the offer to buy the company was worth 30% more than market value, and revenue growth has accelerated in recent quarters, and there is Zendesk’s credible growth story behind it.

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