Investor concerns threaten momentary sell-off
25 November 2021
Dynamic investor Legion Partners Asset Management has said it will fight the planned sale of the owner of SurveyMonkey to online customer service and CX company Zendesk. Legion says the price – originally $ 4 billion but after the share price fell, now equates to around $ 3.4 billion – undervalues the company.
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 conduct a review, in an effort to remedy to what she described as “underperformance”, blamed on “poor governance, oversight and failure to take strategic action to generate shareholder value.” At the end of this month, it was announced that Zendesk would buy the company under a deal in which Momentive shareholders would receive 0.225 Zendesk shares for each of their Momentive shares, which at the time was about $ 28 per share. . Since then, Momentive shares and Zendesk shares have lost value and the deal is now valued at around $ 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 for shareholders, as well as their own fiduciary duties. ” In a statement, the investor said: “Legion Partners is strongly opposed to the proposed acquisition of Momentive by Zendesk and is prepared to do whatever is necessary to terminate this agreement.” In addition to Legion, Cannell Capital, which owns 0.6% of Momentive has also expressed “concerns” about the price and the sale process of Momentive.
In response, Momentive said after a “careful and comprehensive review” it determined that the deal with Zendesk would provide the best outcome for its investors. The company said, “We are committed to working closely with our shareholders to ensure they recognize the significant value inherent in the combination.”