Zendesk Owner Light Street Capital Plans to Oppose the Sale to a Private Equity Partnership

Zendesk NYSE:ZEN

 Zendesk (NYSE:ZEN)

Owner of Zendesk (NYSE:ZEN), Light Street Capital, has stated that it will fight the business’s proposed sale to Hellman & Friedman and Permira Advisers and that it wants the company to change its CEO and extend its board.

According to the statement, Light Street, which owns more than 2% of Zendesk (ZEN), put out a proposal as an alternative to the sale that included recapitalizing the company with a $2 billion preferred equity investment it negotiated and a $2 billion additional lending facility. Additionally, the investor suggested a $5 billion company-led tender offer at $82.50 per share for stockholders who wanted to sell their shares, which would have represented a 6.5% premium above the $77.50/share price.

Light Street founder and CIO Glen Kacher said in a letter to the ZEN board on Sunday that “Zendesk did not, and does not, have to sell.” “There is no justification for selling the company for a sum that is 40% or less than the bid that the Board initially rejected. We think the company is worth much more as a standalone entity right now and in the future than the proposed selling price, which was obtained on false pretenses.”

A long-drawn tussle?

After pressuring Zendesk (ZEN) to sell itself for months, activist investor Jana Partners decided to cease its proxy war with the business in late June after the sale was disclosed, prompting resistance from Light Street. After the customer-support software provider decided to be sold to a private equity group for $77.50 per share, Jana withdrew its four board candidates for ZEN.

A private equity bid to buy Zendesk (ZEN) for between $127 and $132 per share was rejected by the firm in February. After the February bid was rejected, some investors first seemed dissatisfied with the $77.50 share price. The Jane news from the time seemed to disprove that hypothesis.

Bloomberg was the first to report on the story of Light Street. The European Union set a temporary deadline of September 21 to decide on the planned acquisition of Zendesk by Hellman & Friedman and Permira earlier this month.

Featured Image:  Megapixl @Wolterk

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