if someone knocks waving at your door with a check for $17 billion, you should let them in for a chat. But when it received the exact same offer from a consortium of private equity firms this week, Zendesk’s board rejected the deal on the grounds that it undervalued the company.
In a statement, they said they were under an obligation to review such an offer, but after doing so, they were confident in turning it down:
“Consistent with its fiduciary duties, the Board of Directors has concluded, after careful review and consideration in consultation with its independent financial and legal advisers, that this non-binding proposal significantly undervalues the Company and is not in the best interest of the Company and its shareholders. †
The Wall Street Journal reports that the company could find itself in a shareholder battle over private equity stakes in its company, along with its efforts to close the deal for the company that owns SurveyMonkey, so the matter cannot be settled. concluded with the resignation of management of this particular offer.
Jesús Hoyos, principal consultant at Cx2 Advisory, which tracks the customer experience (CX) market in which Zendesk competes, said the company made the right decision to decline the offer because it has ample opportunities to expand its CX market. expand.
“It was wise to reject the takeover offer,” Hoyos told Marketingwithanoy. “Their expansion in Latin America has been a success thanks to their integration with WhatsApp and excellent marketing. I see them worth more than $17 billion in the future.
Zendesk’s core product is help desk software, but it has expanded into other areas in recent years. It recently released the Zendesk Suite, which bundles Zendesk Support, Guide, Chat and Talk in one package. It is 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, owner of SurveyMonkey, giving it a more direct path to 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 anticipated growth is a big part of why it turned down the private equity offering, but it’s also sparked controversy among activist investors who don’t like the direction Momentive would take the company.