Zendesk holder Light Street plans to oppose sale to private equity consortium [M A News on Seeking Alpha]

Zendesk sign at company headquarters in Silicon Valley

Michael Vi/iStock Editorial via Getty Images

Zendesk (NYSE:ZEN) holder Light Street Capital said it plans to oppose the company’s planned sale to Hellman & Friedman and Permira Advisers and wants the company to expand its board and replace its CEO.

Light Street, which has over a 2% stake in Zendesk (ZEN), proposed an alternative to the sale including a recapitalization of the business consisting of a $2 billion preferred equity investment arranged by Light Street and a $2 billion incremental debt facility, according to a statement. The investor also proposed a $5 billion company-led tender offer at $82.50 per share for shareholders who would like to sell their shares, representing a 6.5% premium to the $77.50/share.

“Zendesk did not, and does not, have to sell, ” Light Street founder and CIO Glen Kacher wrote in a note on Sunday to the ZEN board. “There is no justifiable reason to sell the Company at a price more than 40% below the offer initially rejected by the Board. We believe the Company is worth far more now, and in the future, as an independent company than the contemplated sale price derived under manufactured duress.”

The Light Street opposition comes after activist investor Jana Partners, which had been pushing Zendesk (ZEN) for months to sell itself, dropped its proxy battle with the company in late June after the sale was announced. Jana withdrew its four nominees for the ZEN board after the customer-support software company agreed to be sold to a private equity consortium for $77.50/share.

In February, Zendesk (ZEN) rejected a private-equity offer to acquire the company for between $127 and $132 a share. Some investors initially appeared to be disappointed by the $77.50/share price in light of the rejected February bid. The Jane news at the time seems to put that theory to bed.

The news about Light Street was earlier reported by Bloomberg.

Earlier this month The European Union has set a provisional deadline of Sept. 21 to rule on Hellman & Friedman and Permira’s planned purchase of Zendesk.