Zendesk Inc. shareholder Jana Partners is urging the customer service company to walk away from a deal to buy Momentive Global, the parent company of SurveyMonkey.
Jana Partners wants Zendesk’s board to drop the deal now instead of waiting months for a shareholder vote that it said appears likely to fail, according to a letter the New York activist firm sent to the software firm’s board.
“We believe Zendesk is highly undervalued and has far more attractive opportunities to create shareholder value than by acquiring Momentive,” Jana stated.
Jana also wrote that the Momentive deal “lacks financial merit, has questionable strategic logic, and introduces a high degree of execution risk for Zendesk shareholders.”
Jana said it plans to vote its shares against the issuance of Zendesk stock that would be needed to pay for the deal and could seek to replace board members.
Zendesk shares closed up more than 7% Tuesday, while Momentive’s shares fell 3%.
Zendesk announced in late October that it planned to buy Momentive in an all-stock deal, which at the time was valued at about $4 billion. Momentive shareholders are to receive 0.225 Zendesk share for each Momentive share.
The deal, which requires approval from both sets of investors, is worth roughly $3.2 billion based on Monday’s closing prices.
That is $21.40 a share compared with $28 when it was announced, noted he Wall Street Journal, which first reported the news.