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Investor Group Acquires Zendesk for $10.2B in All-Cash Deal

The company will be privately held after the deal concludes in the fourth quarter of 2022.

An investor group of private equity firms, led by Hellman & Friedman LLC and Permira, has agreed to acquire SaaS provider Zendesk for $10.2 billion in an all-cash deal. Zendesk shareholders will receive $77.50 per share, a 34% premium over Zendesk’s closing stock price on June 23, 2022. Once the transaction is complete, Zendesk will become a privately held company. Zendesk’s board unanimously approved the deal which is expected to close in the fourth quarter of the year. It is subject to customary closing conditions which include approval by Zendesk shareholders.

Zendesk offers a variety of products and services to help companies with customer service and sales and to improve customer experiences. Their customer service solutions are scalable and are used by more than 100,000 businesses including Xero, Uber, REA Group and Showpo.

“This is the start of a new chapter for Zendesk with partners that are aligned with the strength of our agile products and talented team, and are committed to providing the resources and expertise to continue our growth trajectory,” said Mikkel Svane, founder, chairman and CEO of Zendesk, in a June 24, 2022 news release.

“With Hellman & Friedman and Permira’s support, we’ll continue to execute on our long-term strategy with our customers as our top priority, taking full advantage of the opportunity we see to help businesses navigate the ever changing expectations and demands of their customers,” Svane added.

TechCrunch reports that this is the latest news in a months-long saga that included turning down an acquisition offer of $17 billion and an offer to buy Momentive, Survey Monkey’s parent company. According to TechCrunch, Zendesk turned down the $17 billion acquisition offer from a group of private equity firms, because Zendesk felt the company was being undervalued.

“Consistent with its fiduciary obligations, after careful review and consideration conducted in consultation with its independent financial and legal advisors, the Board concluded that this non-binding proposal significantly undervalues the Company and is not in the best interests of the Company and its shareholders,” said Zendesk.

Carl Bass, lead independent director for Zendesk, also commented on the multi-billion-dollar deal.

“The Board conducted an extensive strategic review over a three-month period, receiving an actionable offer from Hellman & Friedman and Permira after the termination of our formal process. This transaction provides certainty of value for our shareholders at a significant premium to Zendesk’s trading price,” said Bass.

“The extensive strategic review process included the evaluation of both standalone and transactional alternatives and considered a range of factors including current and anticipated market conditions, business momentum and long-term outlook. During this period, we also worked constructively with major shareholders. The Board concluded that this transaction was the best alternative and the Board voted unanimously to support this transaction,” Bass added.

Tarim Wasim, partner at Hellman & Friedman, said, “Over the last 15 years, Zendesk has revolutionized how companies serve their customers and has become a leading platform within the customer experience ecosystem. We deeply believe in the company’s growth opportunity as it continues to help businesses across the world delight their customers.”

Except for stating the company would become a privately held firm, Zendesk has not commented on how the acquisition might impact the company as it is currently structured and managed.

Insider Take

Zendesk was hoping for a bigger paycheck, but after rejecting the $17 billion acquisition offer earlier this year, their stock dropped and they had to figure out what was next. Then along comes another offer. Though significantly lower, it was apparently attractive enough to entertain. Assuming Zendesk shareholders approve the deal, it will be interesting to see how the company changes.

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