May a selfie sink a $4 billion deal?
Indignant shareholders are questioning whether or not an unpopular software program merger quantities to a sweetheart deal between two CEO buddies — and so they’re pointing to a smiling selfie that the pair posted collectively on Twitter, On The Cash has discovered.
Zendesk, a buyer assist software program maker, mentioned in October that it plans purchase SurveyMonkey guardian firm Momentive in a $4 billion all-stock deal. The transfer baffled some analysts, who argued that it doesn’t make sense for Zendesk — which is larger than Momentive and rising at a quicker price — to soak up a smaller, slower agency.
Now, as shareholder votes on the acquisition strategy in early 2022, some shareholders are crying foul over a private friendship between the CEOs of Zendesk and Momentive that they are saying has created a battle of curiosity.
Simply after the deal was introduced in October, Zendesk co-founder and CEO Mikkel Svane posted a little-noticed picture smiling of himself alongside Momentive CEO Zander Lurie on Twitter.
“Large thanks to @zlurie for being an impressive CEO of Momentive,” wrote Svane. “An inspiring chief. A gentleman. And most of all an excellent pal over the past 18 months.”
He completed the tweet with a kissing emoji.
The duo additionally co-hosted a benefit art show in San Francisco alongside different Silicon Valley honchos together with Carl Bass, lead director of the Zendesk board, in September — almost two months earlier than Zendesk’s deal to amass Momentive was introduced.
Certainly, some steaming shareholders have even speculated that the selfie — which reveals a picturesque vary of hills lined with fir bushes within the background — might have been taken at Bass’s Lake Tahoe residence.
Activist investor Legion Companions, which owns about 1.4 p.c of Momentive, slammed Svane and Lurie’s friendship in a scathing investor letter final week that included a hyperlink to the pair’s selfie.
“Lurie and Svane have a really public and shut relationship as disclosed on Mr. Svane’s Twitter account – what ought to have been an apparent and clear battle was seemingly neglected by a Board that seems to worth its relationship with fellow Silicon Valley insiders over the stockholders they purportedly symbolize,” Legion Companions wrote.
Funding supervisor Jana Companions, a giant Zendesk investor led by hard-charging shareholder activist Barry Rosenstein, can also be elevating hackles over the executives’ friendship and calling for the deal to be scrapped.
“Was this motivated by the Zendesk CEO’s private friendship with the CEO of Momentive?” wrote Jana Companions in a scathing November letter. “Or is the board merely not sufficiently engaged to appropriately safeguard shareholder pursuits?”
Zendesk and Momentive didn’t reply to requests for remark however have insisted publicly that they’re going ahead with the merger.
On the day the deal was introduced, shares of Zendesk fell a whopping 16 p.c. On the similar time, shares of Momentive — which counts Meta chief working officer Sheryl Sandberg and tennis famous person Serena Williams amongst its board members — additionally plummeted 9 p.c. Shares of each corporations have nonetheless not recovered to pre-announcement ranges.
If Legion, Jana and different disgruntled traders get their approach, Zendesk and Momentive shareholders will vote down the merger when it comes up for a vote within the first few months of 2022 — or the businesses will learn the room and keep away from bringing the merger up for a vote within the first place.
The standoff comes months after activist shareholders nuked a proposed $15 billion buyout of a call center software firm Five9 by videoconferencing big Zoom. The businesses announced the deal was off in September, following an outcry from Five9 traders who pointed to Zoom’s slowing post-pandemic development prospects.