Momentive investor Legion Partners Asset Management says it will fight the SurveyMonkey owner's planned sale to online customer service and CX firm Zendesk. Legion says the price tag - originally c.$4bn but after share price falls now equivalent to around $3.4bn - undervalues the business.
In October, Legion called for a potential sale of Momentive (previously known as SurveyMonkey), and wrote to the latter's Board urging it to hire a bank to run a review, with the aim of addressing what it described as 'underperformance', blamed on 'poor governance, oversight and inability to take strategic action to drive stockholder value'. At the end of that month, it was announced that Zendesk would be buying the company in a deal in which Momentive shareholders would receive 0.225 shares of Zendesk stock for each of their Momentive shares, at the time representing about $28 a share. Since then, both Momentive's shares and Zendesk's shares have fallen in value and the transaction is now valued at about $3.4 billion, according to data compiled by Bloomberg.
As a result, Legion, which owns a 1.4% stake in Momentive says it is 'increasingly disappointed with Momentive's Board of directors and their 'continued disregard toward shareholders, as well as their own fiduciary duties'. In a statement, the investor said: 'Legion Partners is strongly against the proposed acquisition of Momentive by Zendesk and is willing do to whatever is necessary to put an end to this deal' In addition to Legion, Cannell Capital, which owns 0.6% of Momentive has also voiced 'concerns' about the price and process under which Momentive is being sold.
In response, Momentive said after a 'robust and comprehensive review', it had determined that the deal with Zendesk would provide the best outcome for its investors. The company stated: 'We are committed to closely engaging with our shareholders to ensure they recognize the significant value inherent in the combination'.
Web site: www.momentive.ai .
All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.