Zendesk to be acquired by investor group for $10.2 billion

Yahoo Finance Live anchors discuss the possible acquisition of Zendesk.

Video transcript

JULIE HYMAN: Let's talk about one more mover that we are watching as we maybe will see an increased amount of M&A as things come down, companies maybe looking for bargains here. Here's an example of something that was seen as a bargain perhaps by private equity.

Zendesk is agreeing to be acquired by an investor group led by global investment firms Permira and Hellman & Friedman for $10.2 billion. So Zendesk will become a privately held company after this deal is completed. What's interesting about this is Zendesk has really gone back and forth on this, right?

BRAD SMITH: Yeah.

JULIE HYMAN: There were reports that it was up for sale. Then it said no, we've decided actually we're going to stay independent. Then the reports resurfaced that it was up for sale. And here, after the stock fell some 28% year to date, the deal finally gets done. You know, and it seems like maybe the company was not in as much a position of strength when all was said and done, when you had this agreement after the stock had fallen.

BRAD SMITH: Yeah, this the result of an activist campaign. JANA Partners had initiated this. And they eventually had a settlement agreement with them. And so this sale potentially for Zendesk and to Hellman & Friedman, and additionally, Permira, or Permira-- we were practicing the pronunciation earlier-- it actually throws them in the ranks of this portfolio that Hellman & Friedman has of a lot of other software companies-- AthenaHealth.

They've invested in [INAUDIBLE], if people have heard of that one before. Splunk and Sprinklr as well, which is one that I followed for years here and actually been a user of. And so within this, perhaps there's something that Hellman & Friedman could lend in terms of a knowledge set. But again, this is really just the end result or the final product of an activist campaign that was looking for a measure, such as this, to have some type of capitalization on their investment.

JULIE HYMAN: Well, I mean, again, looking back at the price here, the price per share for this deal is $77.50, OK? The stock is rising quite a bit today, rising only, though--

BRAD SMITH: [INAUDIBLE]

JULIE HYMAN: Yeah, but it's rising just to not even $75. And if you look at that longer term chart, I mean, the stock, it was trading around $100 just about a month ago.

BRAD SMITH: Yeah.

JULIE HYMAN: So now that it's going out at $77.50, I don't know. That's-- it's interesting that the activist-- I don't know where JANA bought its shares originally. But anyone who bought these shares at the beginning of the year and is now getting bought out at $77.50, not a fantastic outcome.

BRAD SMITH: A real reason to be upset, perhaps.

JULIE HYMAN: Yeah.