Hellman & Friedman and Permira is going to take Zendesk private in a USD 10.2 billion deal, a turn of events that comes just weeks after the company concluded it would remain public.
The San Francisco-based software company said shareholders will receive USD 77.50 per share in cash, representing a premium of 33.7 per cent to the stock's last closing price. Still, it marked a deep discount compared with a prior offer that valued the firm at up to USD 16 billion in February.
Zendesk said the offer from Hellman & Friedman emerged after the termination of its formal process.
A subsidiary of the Abu Dhabi Investment Authority (ADIA) and Singapore's sovereign wealth fund GIC (GIC.UL) also joined the investor consortium. Hellman & Friedman and Permira said they have arranged for debt and equity financing commitments.
The deal marked a win for activist investor Jana Partners, which has a stake of nearly 2.5 per cent in the software firm. Jana has been pushing the company to sell itself after it failed to buy SurveyMonkey parent Momentive Global in a USD 3.9 billion deal.
The Momentive deal fell through after it was rejected by Zendesk shareholders. In February, Zendesk received an unsolicited bid of USD 127-USD 132 per share in cash from private equity firms. It rejected the offer, but did not name the bidders. read more
By agreeing to the latest offer from Hellman & Friedman, Zendesk will avoid losing board seats in a proxy fight with Jana at the company's annual meeting scheduled for August. read more
"If this is the end for it as a public entity, I think most would see it as a very disappointing ending," Craig-Hallum analyst Jeff Van Rhee said. "We've long felt this is a premium company, premium product, a lot of runway for long-term growth."
The equity value of the deal that is expected to close in the fourth quarter is USD 9.5 billion based on 122.54 million outstanding shares, according to Refinitiv data.