By Svea Herbst-Bayliss
(Reuters) -Zendesk Inc said on Friday that its investors rejected a proposed takeover of SurveyMonkey parent Momentive Global and that it terminated the merger agreement.
“While we were excited by the potential of this transaction to transform the customer experience and create stockholder value, we respect and appreciate the perspectives of our stockholders,” Zendesk founder and Chief Executive Officer Mikkel Svane said in a statement.
The deal, valued at roughly $4 billion, had been roundly criticized by prominent investors including state pension funds and large mutual funds, which questioned its rationale and said it would likely be too risky.
Shareholders of both companies had to vote for the deal in order for the merger to be completed. But with Zendesk investors lining up against it, it was widely expected that the deal would be voted down, leading to an end of the proposed takeover.
The official vote occurred several hours ago and the company said in a regulatory filing late in day that holders of 101,509,554 shares, or 83.5% of the common stock issued, were present at the vote. A total of 91,677,121 votes were cast against the deal while 9,334,851 votes were cast in favor, while 497,581 abstained.
In spite of the loss, Svane sounded an optimistic note, saying that Zendesk’s “business has never been stronger” and that the company is on a “clear path to (generate) $3.4 billion in revenue by 2025.”
In October, Zendesk agreed to buy Momentive in an all-stockdeal. Activist investment firm Jana Partners urged the company to abandon the acquisition and investors including Janus Henderson, Neuberger Berman and Florida’s pension system, Florida State Board of Administration, spoke out against it.
“We believe a rejection of the proposed Momentive acquisition would be a huge win for Zendesk shareholders, a repudiation of Zendesk’s board, and a strong indication that Zendesk either requires significant board change or should be sold,” a representative for Jana Partners said earlier on Friday before the vote was completed but as early indications suggested Zendesk investors would reject it.
Last week Reuters reported that Jana Partners launched a proxy fight at Zendesk and nominated four director candidates, arguing the company needs to be rehabilitated after the unpopular attempt to buy Momentive.
(Reporting by Svea Herbst-Bayliss and Krystal Hu in New YorkEditing by Tomasz Janowski and Matthew Lewis)