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TIG Advisors, LLC, which holds about 1.5 million shares of Zendesk (NYSE: ZEN), announced its intent to vote "AGAINST" Zendesk's proposed acquisition of Momentive Global Inc. (NASDAQ: MNTV) at the upcoming Special Meeting on February 25, 2022. The firm criticized the transaction, citing a significant negative market reaction, including an 18% stock drop on the announcement date and additional declines thereafter. They emphasize a disconnect between Zendesk's leadership and shareholder interests, urging the Board to reconsider the acquisition and consider new board nominations to align with shareholders.
Positive
TIG Advisors holds a significant number of shares, indicating substantial investment and interest in Zendesk.
Concerns raised may prompt Zendesk's Board to seek a more shareholder-aligned strategy, potentially enhancing long-term value.
Negative
Zendesk's stock fell 18% upon the acquisition announcement, reflecting strong market disapproval.
Continued opposition from major shareholders and analysts could lead to a loss of confidence in current management.
The potential for a proxy battle may create instability and distract from the company's operational focus.
NEW YORK--(BUSINESS WIRE)--
TIG Advisors, LLC, an investment adviser which owns approximately 1.5 million shares of Zendesk, Inc. (NYSE: ZEN) (“Zendesk” or the “Company”) today sent a letter to the Zendesk Board of Directors regarding its intention to vote “AGAINST” Zendesk’s proposed acquisition of Momentive Global Inc. (NASDAQ: MNTV) (“Momentive”), at the Company’s Special Meeting of Stockholders to be held on February 25, 2022.
The full text of the letter follows.
February 17, 2022
The Board of Directors
Zendesk Inc. 989 Market St. San Francisco, CA 94103
Dear Members of the Board,
TIG Advisors, LLC and its affiliates collectively hold approximately 1.5 million shares of Zendesk, Inc. (NYSE: ZEN) (“Zendesk” or the “Company”) as of February 16. We are writing to the Board of Directors (the “Board”) to share our views on the proposed acquisition of Momentive Global Inc. (NASDAQ: MNTV) (“Momentive”) announced on October 28, 2021. We plan to vote “AGAINST” the proposed acquisition.
Zendesk shareholders have given the Company every opportunity to make their case in defense of the proposed acquisition of Momentive. Such opportunities have included an investor day, various conferences, earnings presentations, one-on-one meetings and nearly four months of our time. The market, however, has stood firm on its opinion of the transaction as illustrated by the depreciation of Zendesk’s stock by 18% on the day the transaction was announced, and the further 5% tumble it took following the Company’s November 18, 2021 Investor Day.
We sought to share our opinion of the deal in a constructive manner, privately submitting a letter to the Board in December 2021, in which we stated that the Momentive transaction should be abandoned due to the overwhelming market reaction and the strong operating results of core Zendesk that would be diluted if a transaction were consummated. We put the Board on notice when we said that if the Company were to drag this process out to a shareholder vote in the face of such clear opposition it would erode trust in management. With the vote a little over a week away, we feel it now represents more than just a rejection of the Momentive transaction, but a referendum on the current leadership and direction of Zendesk.
Since voicing our concerns directly to the Board in December, key fundamental shareholders, credible, independent third parties, ISS and Glass Lewis, and sell side analysts have all voiced strong opposition to the deal. There is a clear misalignment in vision between Zendesk leadership and the owners of the Company, its shareholders. We implore the Board to listen to shareholders at the upcoming vote and recognize that broad change is not only warranted but required. We note the Board nominations by Jana Partners, and believe it is in the best interests of the Company and its shareholders, that the Board avoid a monthslong proxy battle, and instead immediately install individuals to the Board who share a common vision with Zendesk’s shareholders.
Regards,
Drew Figdor Portfolio Manager
Who is TIG Advisors?
TIG Advisors is an investment advisor based in New York City with approximately eight billion in assets, representing a diverse range of investment strategies primarily for institutional investors, including pension funds, life insurance companies and others. Our Firm, founded in 1980, has long held a goal of working constructively with management teams to help identify, surface, and capture value that may not be otherwise apparent to the marketplace.
TIG Advisors believes in three key governance principles as it relates to the conduct of the boards of the companies that we invest in:
Accountability and Engagement – the board holds itself accountable to stockholders and maintains an active and responsive engagement process with its stockholders. Effective engagement includes actively soliciting stockholder views on significant matters that impact long-term stockholder value and being responsive to the expressed views of stockholders.
Transparency – the board maintains a transparent strategic and decision-making process, open to scrutiny from stockholders. The board should provide timely and complete information to stockholders to allow them to evaluate board decisions and make informed voting and investment decisions.
Independence and Alignment – board members are independent enough to diligently supervise management, ensuring that they act in the interests of stockholders. Boards should have effective, aligned and independent leadership that is focused on preserving and enhancing stockholder value on a time and risk-adjusted basis.
TIG has a strong track record of identifying uncorrelated investment opportunities in both public and private markets, and utilizing its longstanding operating platform to generate attractive, risk-adjusted returns for investors. For more information, please visit https://www.tigfunds.com/.
