Zendesk’s $4 bn Acquisition of Momentive

By Akhil Vajjhala and Siddharth Tripurani (NYU), and Anish Umasuthan (McGill)

 

Overview of the deal


Acquirer: Zendesk

Target: Momentive

Implied Equity Value: $4 billion

Total Transaction Size: $4 billion

Announced date: October 28th, 2021

Target advisor: Goldman Sachs & Co. LLC


Zendesk, Inc. (NYSE: ZEN) will acquire Momentive Global Inc. (Nasdaq: MNTV) for $4 billion in a deal announced October 28. Pursuant to the agreement, Momentive stockholders will receive 0.255 shares of Zendesk for each share of Momentive. Subsequently, Zendesk stockholders will own approximately 78% of the combined company, while Momentive stockholders will own approximately 22%.


Zendesk said it anticipates the acquisition will be growth accretive in the first full operating year and will accelerate Zendesk’s revenue to 3.4 billion in 2024, one year sooner than its prior goal. Zendesk will also use the savings from the transaction to support growth opportunities. According to the filing, the transaction will qualify as a tax-free reorganization for the purpose of U.S. federal income taxes.


Both companies’ customer bases and complementary capabilities and offerings are expected to expand product usage and sales opportunities. As a result, the combined company will allow Zendesk to get feedback on customer service and collect important data about these interactions. Therefore, companies will now be able to listen to their customers, develop a better picture and act on this insight.


“(W)ith Momentive, Zendesk will create what businesses really need(,) a customer intelligence company that connects what customers say and do, with how they think and feel.” - Zendesk Press Release

Company Details (Acquirer - Zendesk)


Zendesk is a public company headquartered in San Francisco, California. It provides software-as-a-service products related to customer support, sales, and other customer communications.


Founded in 2007, headquartered in San Francisco, California

CEO: Mikkel Svane

Number of employees: 3570 (2019)

Market Cap: $12.28B (as of 05/11/2021)

EV: $12.46B

LTM Revenue: $1.25B

LTM EBITDA: – $127.83M

LTM EV/Revenue: 9.99x

LTM EV/EBITDA: