Proxy advisory firms have criticized the proposed takeover of Momentive Global, questioning the financial merit and logic of the deal.
The news comes after many prominent Zendesk shareholders voiced their concerns regarding the high risks involved in acquiring the parent company of SurveyMonkey.
Yet, this fresh twist may further jeopardise the deal, as Glass, Lewis & Co and Institutional Shareholder Services (ISS) urged all shareholders to challenge it.
As reported by Reuters, Glass Lewis analysts stated:
We believe Zendesk’s proposed acquisition of Momentive could readily be characterized as a case of, ‘ready, fire, aim’… We recommend shareholders vote AGAINST this proposal.
Meanwhile, ISS stipulated that “support for this proposal is not warranted.” Going further, the advisory firm suggests that the deal has “the potential to become that rarest of special situations, a merger that is disliked by shareholders of both the seller and the buyer.”
These assessments will create further uncertainty regarding whether Zendesk shareholders will sign off on the acquisition when they vote later this month.
Yet, the Zendesk c-suite seemingly remain fully committed to the deal. In January, they sent a letter to all shareholders, reiterating its strategic and financial merits.
In the letter, The Zendesk Board of Directors noted:
Zendesk’s proposal reflects the Board’s unanimous conviction that this combination represents a unique opportunity for Zendesk stockholders and a critical step forward for Zendesk to achieve its strategic ambition to transform customer relationship management through the development of a Customer Intelligence Platform.
The proposed acquisition also aims to double Zendesk’s addressable market to $165 billion, accelerate Momentive’s enterprise growth, and generate a stream of sales-led revenue synergies.
However, ever since its announcement in October 2021, the voices of leading investors – such as Jana Partners – advisory firms, and prominent stakeholders have cast doubt over the $4 billion, all-stock deal. Now, as the vote approaches, these voices are only growing louder.
