We are investigating whether the directors of Zendesk, Inc. (ticker: ZEN) (“Zendesk”) acted in the best interests of Zendesk shareholders in approving the sale of Zendesk to an investor group led by Permira and Hellman & Friedman LLC for $77.50 per share in cash cash after rejecting a proposal for $127-132 per share in February 2022.
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Why is there an investigation?
On June 24, 2022, Zendesk announced an agreement for an investor group led by Permira and Hellman & Friedman LLC (“Investor Group”) to purchase all of the outstanding shares of Zendesk for $77.50 per share in cash. The agreement has been approved by the Zendesk board of directors (“Board”).
Our investigation concerns whether Zendesk’s Board acted in the best interests of Zendesk shareholders in approving the sale, including whether the acquisition price adequately compensates Zendesk shareholders, and whether all material information regarding the transaction has been fully disclosed.
Notably, on February 10, 2022, Zendesk’s Board confirmed that it had received, thoroughly reviewed and rejected an unsolicited, non-binding proposal from a consortium of private equity firms to acquire all of Zendesk’s outstanding shares in an all-cash transaction valued at $127-$132 per share on the ground that the proposal significantly undervalued the Company.
On June 9, 2022, Zendesk’s Board advised that after a comprehensive review of strategic alternatives aimed at enhancing shareholder value, it had unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company is in the best interest of the Company and its shareholders.
On June 14, 2022, the Wall Street Journal reported talks to settle differences between Zendesk and activist investor Jana Partners (which owned nearly 3% of Zendesk’s outstanding shares) that could include the departure of Chief Executive Officer Mikkel Svane and Carl Bass, Zendesk’s lead independent director.
Then just over ten days later, the Board concluded that the sale to the Investor Group for $77.50 per share in cash was in the best interests of the Company and its shareholders. The same day, Jana Partners withdrew its nominees for the Zendesk Board.
Presently, according to an analysis of Wall Street price targets for ZEN in the last 90 days published on Seeking Alpha, there is an average price target for ZEN of $98.63 per share, and a high price target for ZEN of $193.00 per share.
Further, according to a discounted cash flow analysis by the Simply Wall Street research firm, Zendesk’s fair value is $186.46 per share.