The Zendesk-Momentive saga finally came to an end Friday after shareholders rejected Zendesk's proposed acquisition. The decision comes on the heels of a proxy battle initiated by Jana Partners following a failed takeover bid by a group of PE firms that would have valued Zendesk at $17 billion.
Zendesk first announced its intent to pursue an all-stock acquisition of Momentive (formerly known as Survey Monkey) last October. The company hoped to use Momentive’s expertise in customer experience to add more intelligence to its customer relationship management service, predicting $4.6 billion in combined revenue for the companies by 2025.
But in January, Jana Partners wrote a letter to the board of directors pushing for rejection of the acquisition, citing concerns over the suitability of survey technology with Zendesk's existing services, and the risk of pursing an all stock-transaction when Zendesk's own valuation was relatively low.
What followed was a back and forth between Zendesk management and activist investor Jana Partners, along with advisory firms ISS and Glass Lewis. “We believe the board must either be replaced with capable fiduciaries or reverse course and engage with interested strategic and financial buyers to sell the company,” wrote Jana managing partner Barry Rosenstein in a letter to the board earlier this month.
Following the termination of the Momentive acquisition, Zendesk's future remains unclear. The proxy battle initiated by Jana Partners is still outstanding, and if it's successful, four Zendesk board members will be replaced. The next time a takeover bid comes around, Zendesk may not have the option to turn it down.