Embattled software maker Zendesk on Friday agreed to be bought by private equity firms Hellman & Friedman and Permira, continuing a spate of acquisitions in the sector involving private firms. While Zendesk stock jumped on the $10.2 billion deal, the purchase price remains lower than an offer the board rejected in February.
Zendesk stockholders will receive $77.50 a share, a roughly 34% premium to Thursday's closing price of $57.95. Zendesk stock had been down 44% in 2022.
ZEN stock soared 28% to close at 74.17 on the stock market today. Shares catapulted more than 50% before the market open.
"We suspect investors are left disappointed by the price, particularly when considering ZEN rejected proposals earlier in the year at considerably higher levels," said Jefferies analyst Samad Samana in a report.
He added: "We believe most of this is explained by a change in the macro environment. The software group has de-rated as we enter a higher interest rate regime, which corresponds with an uncertain macro outlook over the short-to-medium term. We also see some of the discount as a reflection of growth slowing, uneven execution, and lower investor confidence following the unsuccessful bid for MNTV (Momentive Global)."
Other public software companies acquired this year by private-equity firms include Citrix, Anaplan, CDK and SailPoint.
Zendesk Stock: Momentive Deal Dropped
In February, Zendesk received an unsolicited takeover offer from buyout firms that valued the company at $127 to $132 a share. Those firms included Hellman & Friedman, Advent International and Permira, according to a Bloomberg report.
Meanwhile, Zendesk sells software that companies use to manage customer-service call centers and websites.
The software-as-a-service provider's software tracks and prioritizes customer support tickets. In addition, Zendesk also sells a chatbot service that interacts with customers on websites.
In October 2021, Zendesk agreed to buy SurveyMonkey's parent, Momentive Global, sparking a sell-off by shareholders of ZEN stock. Also, Zendesk dropped the Momentive deal in February amid shareholder opposition, including activist investor Jana Partners.
Company Planned To Not Sell Itself
San Francisco-based Zendesk said June 9 that it would no longer seek to sell itself after a strategic review.
But some analysts had speculated Adobe could be a potential acquirer of Zendesk.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.