Zendesk has had a difficult time over the last several months. It has been hounded by activist investors, Jana Partners. It turned down a $17 billion acquisition in February believing it was worth more. Its investors turned down a deal to buy Survey Monkey’s parent company, Momentive the same month.
Today, the drama concluded when Zendesk was acquired for $10.2 billion by a consortium of private equity firms, well below that original offer.
But the SaaS market has shifted dramatically over the last few months, and Zendesk has been caught in the middle of it in a maelstrom of investor drama. Earlier this month, the company concluded it would stay independent, a move that caused the stock price to plunge.
Now it’s been sold to an investor group led by Permira and Hellman & Friedman. The deal is for $77.50 per share, a 34% premium over yesterday’s price, according to a statement from the company, but still well below the $17 billion private equity offer in February.
Zendesk stock was 57.95 per share this morning with a market cap of $7.1 billion, prior to the marketing opening. It was up to over $74 as of publication, a significant boost the company hadn’t seen in some time.
For Zendesk, it gave unhappy investors a way to get some return on their investment, something that independent board director Carl Bass acknowledged in a statement announcing the deal. “The Board concluded that this transaction was the best alternative and the Board voted unanimously to support this transaction.”
Stephen Ensley, a partner at Hellman & Friedman said his firm believes the company still has tons of potential with a huge customer base. “We see tremendous value in Zendesk’s platform and ability to grow at scale. Its intuitive yet powerful offering serves over 100,000 companies, ranging from the smallest businesses to the largest enterprises,” Ensley said in a statement.
Company co-founder and CEO Mikkel Svane was conspicuously absent from the announcement. Svane launched the company with his co-founders in 2007, raising more than $85 million, according to Crunchbase data, before going public in 2014.
When the company turned down the $17 billion offer, a TechCrunch analysis concluded it was the right decision, based on the financial data. Perhaps, but now, it will be off the the board for far less, as market conditions shifted.
The deal is expected to close in the fourth quarter, at which point Zendesk will go private again.
