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Abu Dhabi part of $10.2bn deal to take US software giant private

By Reuters
Creative Commons
Zendesk shares were up 27.9 percent at $74.10 late on Friday morning on the New York Stock Exchange
  • Zendesk agreed to be taken private by investment firms
  • $10.2 billion deal led by Hellman & Friedman and Permira
  • Comes just weeks after the company concluded it would remain public
  • Unit of Abu Dhabi Investment Authority also joined the consortium

Zendesk Inc on Friday agreed to be taken private by investment firms led by Hellman & Friedman and Permira in a $10.2 billion deal, a turn of events that comes just weeks after the company concluded it would remain public.

The San Francisco-based software company said shareholders will receive $77.50 per share in cash, representing a premium of 33.7 percent to the stock’s last closing price. Still, it marked a deep discount compared with a prior offer that valued the firm at up to $16 billion in February.

Zendesk said the offer from Hellman & Friedman emerged after the termination of its formal process.

A subsidiary of the Abu Dhabi Investment Authority (ADIA) and Singapore’s sovereign wealth fund GIC also joined the investor consortium. Hellman & Friedman and Permira said they have arranged for debt and equity financing commitments.

The deal marked a win for activist investor Jana Partners, which has a stake of nearly 2.5 percent in the software firm. Jana has been pushing the company to sell itself after it failed to buy SurveyMonkey parent Momentive Global Inc in a $3.9 billion deal.

The Momentive deal fell through after it was rejected by Zendesk shareholders. In February, Zendesk received an unsolicited bid of $127-$132 per share in cash from private equity firms. It rejected the offer, but did not name the bidders.

By agreeing to the latest offer from Hellman & Friedman, Zendesk avoids losing board seats in a proxy fight with Jana at the company’s annual meeting scheduled for August.

“If this is the end for it as a public entity, I think most would see it as a very disappointing ending,” Craig-Hallum analyst Jeff Van Rhee said. “We’ve long felt this is a premium company, premium product, a lot of runway for long-term growth.”

The equity value of the deal that is expected to close in the fourth quarter is $9.5 billion based on 122.54 million outstanding shares, according to Refinitiv data.

Zendesk shares were up 27.9 percent at $74.10 late on Friday morning on the New York Stock Exchange.