The News: Customer experience software company Zendesk agreed to be acquired by an investor group in an all-cash transaction valuing it at around $10.2 billion, the company announced Friday. Read the full announcement from Zendesk.
The deal, led by investment firms Permira and Hellman & Friedman, will give shareholders $77.50 per share, a premium of about 34% over the company’s closing stock price Thursday, according to the release.
Shares were up about 27% on Friday.
The investment firms plan to take Zendesk private once the deal closes. Also included in the investor group is a wholly owned subsidiary of the Abu Dhabi Investment Authority and GIC.
Zendesk’s board unanimously approved the deal, which it expects to close in the fourth quarter of this year, the company said.
Zendesk to Go Private in What Should Pan Out to be Its Best Route Forward
Analyst Take: The saga of whether Zendesk will go private has come to a conclusion with the Permira and Hellman & Friedman deal being unanimously approved by the Zendesk board. Representing one of, what I expect to be many deals that will see SaaS and Technology companies that have been hit hardest by the tech wreck. Zendesk has been among a list of names that have been thrown around to be taken private, so the fact that this has moved forward should surprise absolutely no one.
While Zendesk has been working hard to build off its strength in CX, the company has had a bit of a growth limitation that has been a byproduct of increased competition in its market, while also not seeing strong traction of its diversification efforts like its Sunshine CRM product that, to this point, has been slow to take off.
I see these types of transactions as opportunistic for both the company, in this case, Zendesk, and the PE firms that are entering at a moment of lower valuation—but likely bailing out these companies from adverse market conditions that will make capital raising increasingly harder.
My belief is that Zendesk will utilize the deal to step back from the immense short-term pressures of the public market to zero in on the growth of its core business, but also to determine how to move from more of a product/feature to a broad-based CX platform. I believe the company has the talent, customer base, and wherewithal to reboot appropriately with the longer horizon provided by being privately held. Especially if the partners investing provide enough financial support and runway—something that requires monitoring as PE firms can be shrewd at times. Having said that, I’m cautiously optimistic this is the best thing for Zendesk long-term. Time will tell.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
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Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. From Big Data to IoT to Cloud Computing, Newman makes the connections between business, people and tech that are required for companies to benefit most from their technology projects, which leads to his ideas regularly being cited in CIO.Com, CIO Review and hundreds of other sites across the world. A 5x Best Selling Author including his most recent “Building Dragons: Digital Transformation in the Experience Economy,” Daniel is also a Forbes, Entrepreneur and Huffington Post Contributor. MBA and Graduate Adjunct Professor, Daniel Newman is a Chicago Native and his speaking takes him around the world each year as he shares his vision of the role technology will play in our future.