ISS, Glass Lewis Urge Zendesk Investors Vote Against Momentive Deal
Proxy advisory firms Institutional Shareholder Services and Glass, Lewis & Co on Friday told investors in Zendesk to vote against a planned takeover of Momentive Global, the parent of web-based survey portal SurveyMonkey, arguing the deal is too risky.
With both ISS and Glass Lewis coming out against the deal after a number of prominent shareholders also opposed it, chances are dwindling that the software company's shareholders will sign it off when they vote later this month.
"We believe Zendesk's proposed acquisition of Momentive could readily be characterized as a case of, 'ready, fire, aim'," Glass Lewis analysts wrote in a note, adding, "we recommend shareholders vote AGAINST this proposal."
ISS wrote "support for this proposal is not warranted," and noted there were so many questions about revenue synergies and financial projections that it "had the potential to become that rarest of special situations, a merger that is disliked by shareholders of both the seller and the buyer."
Zendesk agreed to buy Momentive in October in an all-stock deal valued at roughly $4 billion. Investors, including activist hedge fund Jana Partners, quickly spoke out against the proposal, criticizing its financial merit and logic.
Glass Lewis agreed and wrote: "We do not believe Zendesk investors -- perhaps seeking some stability in the wake of the Company's seesawing quarterly performance -- have been afforded persuasive reason to conclude the Company is well positioned to efficiently realize the lofty objectives underpinning the Momentive transaction."
On Thursday, Zendesk said that it had received takeover interest of its own but had rejected a $127 to $132 a share bid from a group of private equity firms and wanted to push on with plans to buy Momentive.
(In fifth paragraph, corrects description of deal from all cash to all stock.)
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