when someone hits at your door waving a check for $17 billion, you have to let them in for a chat. But when presented with that same offer this week from a consortium of private equity firms, Zendesk’s edge rejected the deal claiming that it undervalued the company.
In a statement, they said they had a duty to review such an offer, but after doing so, they felt confident in rejecting it:
“Consistent with its fiduciary obligations, after careful analysis and consideration conducted in consultation with its independent financial and legal advisors, the Board concluded that this non-binding proposal significantly underestimates the Company and is not in the best interests of the Company and its shareholders. ”
THE Wall Street Journal reports that the company may find itself in a shareholder battle over private equity stakes in its business, along with its efforts to close the deal for the company that owns SurveyMonkey, so the matter cannot be settled with the dismissal of management. specific offer.
Jesús Hoyos, principal advisor at Cx2 Advisory, which monitors the customer experience (CX) market in which Zendesk competes, said the company made the right decision in rejecting the offer because it has many opportunities to expand its CX market.
“It was wise to reject the takeover offer,” Hoyos told Ploonge. “Its expansion in Latin America was a success due to its integration with WhatsApp and excellent marketing. I see them being worth over $17 billion in the future.”
Zendesk’s main product is technical support software, but it has expanded into other areas in recent years. he recently released the Zendesk Suite, which bundles Zendesk Support, Guide, Chat and Talk into a single package. It’s been doing well, with the company reporting that it accounted for $500 million in ARR and 35% of total ARR in its first year.
Last fall, the company bought Momentive, which owns SurveyMonkey, giving it a more direct path to the customer experience. Zendesk spent more than $4 billion on Momentive, betting on the company as a way to expand its market in the future. That projected growth is a big part of why she rejected the private equity offer, but it’s also a cause of controversy among activist investors who don’t like the direction Momentive would take the company.