(Reuters) – Zendesk Inc investors are poised to reject a proposed takeover of SurveyMonkey parent Momentive Global on Friday, effectively dooming the roughly $4 billion deal, people familiar with the matter said.
The deal has been roundly criticized by prominent investors including state pension funds and large mutual funds, which questioned its rationale and said it would likely be too risky.
Shareholders of both companies had to vote for the deal in order for the merger to be completed. But with Zendesk investors lining up against it, it is likely that the proposed takeover will now be terminated, two sources said.
The official vote will be held later on Friday.
A Zendesk representative could not be reached for comment.
In October, Zendesk agreed to buy Momentive in an all-stockdeal worth roughly $4 billion. Zendesk’s stock price fell afterthe acquisition announcement and remained more than 20% belowits pre-deal price until Nov. 30, when activist investment firm Jana Partners wrote a letter publicly opposing the plans and urged the company to abandon the acquisition.
Since then investors including Janus Henderson, Neuberger Berman and Florida’s pension system Florida State Board of Administration have said they would reject the deal. Proxy advisory firms Institutional Shareholder Services and Glass Lewis, which help guide many investors’ votes, also recommended against it.
“We believe a rejection of the proposed Momentive acquisition would be a huge win for Zendesk shareholders, a repudiation of Zendesk’s board, and a strong indication that Zendesk either requires significant board change or should be sold,” a representative for Jana Partners said on Friday.
Last week Reuters reported that Jana Partners launched a proxy fight at Zendesk and nominated four director candidates, arguing the company needs to be rehabilitated after an unpopular attempt to buy Momentive.
(Reporting by Svea Herbst-Bayliss and Krystal Hu; Editing by Tomasz Janowski)
