Update 2:28pm : Adds Zendesk statement, details from ISS recommendation.
Influential proxy service ISS is said to recommend Zendesk ( NYSE: ZEN ) holders vote in favor of the company's sale to Hellman & Friedman and Permira Advisers.
ISS sees downside risk if Zendesk ( ZEN ) holders don't approve $77.50/share sale to private equity consortium.
The ISS recommendation comes ahead of Sept. 19 vote for Zendesk holders on the planned sale. It also follows after Zendesk ( ZEN ) holder Light Street Capital last Monday said i t's opposed to the company's planned sale to Hellman & Friedman and Permira Advisers and wants the company to expand its board and replace its CEO.
“We are pleased that ISS recognizes that the acquisition by the Consortium is the best path forward for Zendesk and provides stockholders with the best available outcome," Zendesk said in a statement . "ISS’s support further validates our view that the immediate, attractive and certain value of the proposed transaction is superior to the risk of the standalone alternative."
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. 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.
“In the event the merger is terminated, ZEN's share price could return to pre-announcement levels of approximately $57.00 per share or less, well below the current $77.50 offer price," ISS warned in its recommendation, according to Zendesk.
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 .
The ISS recommendation was earlier reported by Bloomberg.
Zendesk ( ZEN ) earlier Tuesday released a new investor presentation and reiterated that its board believes the sale to the consortium is the "best path forward" for company and its holders.
For further details see:
Proxy service ISS recommends Zendesk sale to consortium (update)