JANA Partners slams Zendesk’s proposed Momentive acquisition

Zendesk investors launch a savage public attack on the deal.

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In an unusual move, investment firm JANA Partners LLC has publicly released a letter to the Zendesk Board of Directors strongly advising against the proposed acquisition of Momentive. Describing itself as a “significant shareholder” in Zendesk (along with partners), JANA Partners describes the acquisition as lacking financial merit and strategic logic and coming with a “high degree of execution risk for Zendesk shareholders.”

Indeed, immediately following the announcement of the proposed acquisition on October 28, Zendesk’s shares fell sharply against a background of criticism by analysts. Momentive is an AI-powered insights solution built around Survey Monkey, the flagship survey platform.

Among JANA Partners’ specific objections are:

  • The clash between Zendesk’s strategy of securing enterprise customers and the former Survey Monkey’s SMB customer base;
  • The likelihood that the acquisition will dilute Zendesk’s potential for standalone growth;
  • The possibility of creating a deeper integration with Momentive rather than seeking to own it; and
  • Issues Zendesk was having with execution within its own business, prior to the announcement.

Then it gets personal, asking if the friendship between the Zendesk and Momentive CEOs has been a factor or if the Board is not “sufficiently engaged” to protect shareholder interests.

Why we care. Obviously this is not the first time investors have publicly challenged a company’s strategy. Those who covered it will not have forgotten the buffeting Marissa Mayer took at Yahoo from activist investors. But it’s unusual, at least in the marketing tech space, to read such a savage and personal critique. But as JANA Partners points out, the market seems to agree.

About the author

Kim Davis
Kim Davis is currently editor at large at MarTech. Born in London, but a New Yorker for almost three decades, Kim started covering enterprise software ten years ago. His experience encompasses SaaS for the enterprise, digital- ad data-driven urban planning, and applications of SaaS, digital technology, and data in the marketing space. He first wrote about marketing technology as editor of Haymarket’s The Hub, a dedicated marketing tech website, which subsequently became a channel on the established direct marketing brand DMN. Kim joined DMN proper in 2016, as a senior editor, becoming Executive Editor, then Editor-in-Chief a position he held until January 2020. Shortly thereafter he joined Third Door Media as Editorial Director at MarTech.

Kim was Associate Editor at a New York Times hyper-local news site, The Local: East Village, and has previously worked as an editor of an academic publication, and as a music journalist. He has written hundreds of New York restaurant reviews for a personal blog, and has been an occasional guest contributor to Eater.

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