Zendesk, Inc. (NYSE: ZEN) is engaged as a customer service and support software company, which offers a suite of services to help companies interact with their customer base. Shares of the software company are rallying 29% through afternoon trading on Friday, June 24, 2022. Over the past three months, Zendesk has seen average daily volume of 2.54 million shares. However, volume of 33.1 million shares or dollar volume of around $2.47 billion, has already exchanged hands through afternoon trading.
Shares of Zendesk are gaining after the company announced that it has entered into an agreement to be acquired by an investor group co-led by Hellman & Friedman LLC and Permira. Under the terms of the deal, the investor group will acquire all outstanding shares of the software company at $77.50 per cash in cash. This deal valued Zendesk at $10.2 billion. The transaction has been approved by Zendesk’s Board of Directors, but still requires the approval of shareholders and regulators. If approved, Zendesk would become a privately-held company.
“The Board conducted an extensive strategic review over a three month period, receiving an actionable offer from Hellman & Friedman and Permira after the termination of our formal process,” said Carl Bass, lead independent director, Zendesk. “This transaction provides certainty of value for our shareholders at a significant premium to Zendesk’s trading price. The extensive strategic review process included the evaluation of both standalone and transactional alternatives and considered a range of factors including current and anticipated market conditions, business momentum and long-term outlook. During this period, we also worked constructively with major shareholders. The Board concluded that this transaction was the best alternative and the Board voted unanimously to support this transaction.”
The transaction marks an important milestone for the company, after fifteen years and servicing over 100,000 companies. However, the Zendesk deal is also an important moment for the overall broad market. The rise in mergers and acquisition activity suggests that companies and investors are seeing value from the recent market correction. With Zendesk being a big player in the technology space, the takeover by the investor group can be seen a welcoming signal that the investment community is beginning to see bargains from the big tech sell off.
Disclosure: No position. Spotlight Growth has no relationships with any of the companies mentioned in this article and did not receive payment in any form for its creation. This is an opinion article and is not meant to be financial advise. We are not broker-dealers or investment professionals. Please conduct your own due diligence. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/