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Zendesk, Inc. (NYSE:ZEN) today confirmed that it received an unsolicited non-binding recapitalization proposal from Light Street Capital Management, LLC. Light Street indicated it currently owns approximately 2% of Zendesk common stock. Based on the letter from Light Street, the non-binding proposal contemplates a recapitalization of Zendesk consisting of a $2 billion preferred equity investment to be arranged by Light Street, a $2 billion incremental debt facility and $1 billion of cash from Zendesk's balance sheet. The proceeds of the recapitalization, together with cash on Zendesk's balance sheet, would be used to finance a $5 billion tender offer for approximately 50% of Zendesk's outstanding common shares at $82.50 per share. Pursuant to the non-binding proposal, in return for the $2 billion investment, holders of the preferred equity would control approximately 66% of the voting power of Zendesk following the transaction and would receive the right to appoint 50% of the Company's Board of Directors. The non-binding proposal is subject to due diligence and negotiation and execution of definitive agreements, and does not identify sources or commitments for the preferred equity or debt financing.
Zendesk's Board of Directors, consistent with its fiduciary responsibilities and in accordance with Zendesk's previously announced merger agreement with an investor group led by Permira and Hellman & Friedman LLC to acquire 100% of Zendesk's common stock, will carefully review the proposal with the assistance of financial and legal advisors to determine the course of action it believes is in the best interests of the Company and its stockholders. Zendesk stockholders need take no action at this time.
Posted In: ZEN