Declares Intention to Vote AGAINST Inadequate
Proposed Transaction, Which Materially Undervalues Zendesk to the
Detriment of Company Shareholders
Outlines Significant Concerns Over Zendesk
Board's Obstruction of Shareholder Rights and Mismanagement Causing
the Destruction of Shareholder Value
Calls on Zendesk Board to Carefully Consider
Light Street's Superior Proposal for the Benefit of the Company and
Its Shareholders
Full Details of Light Street's Alternative
Proposal for Zendesk Available at www.lightstreet.com/zen
PALO
ALTO, Calif., Aug. 29,
2022 /PRNewswire/ -- Light Street Capital
Management, LLC ("Light Street" or the "Firm"), which manages funds
that own more than two percent of the outstanding shares of
Zendesk, Inc. (NYSE: ZEN) ("Zendesk" or the "Company"), yesterday
sent a letter to the Zendesk Board of Directors (the "Board")
declaring the Firm's intent to vote AGAINST the Company's proposed
transaction with affiliates of funds advised by Hellman &
Friedman LLC and Permira Advisers LLC (the "Proposed Transaction")
and proposing an alternative and superior path forward for the
Company and its shareholders.
In the letter, Light Street expresses its concern that the
Proposed Transaction materially undervalues Zendesk and is
detrimental to shareholder interests. The Firm also outlines
recent examples of active obstruction of shareholder rights and
destruction of shareholder value by the Board, including the
ill-conceived attempt to acquire Momentive in October, 2021, which
received support from less than 10% of Zendesk shareholders, the
February 2022 rejection of an
unsolicited bid to acquire the Company for $127-$132 per
share, and the months-long delay of the Company's annual
shareholder meeting, preventing shareholders from exercising their
shareholder rights to select an alternative slate of Board
nominees.
In light of these actions and the undervaluation of the Company
in the Proposed Transaction, Light Street proposes an alternative
path forward for the Company, which it believes will provide a
superior outcome for all stakeholders and should therefore be
deemed a Superior Proposal by Zendesk's Board of
Directors.
Specifically, Light Street Proposes:
- A recapitalization of the business consisting of a $2 billion preferred equity investment arranged
by Light Street and a $2 billion
incremental debt facility;
- 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 per share
contemplated in the Proposed Transaction;
- The authorization of an open market share buyback program
utilizing remaining proceeds (if any) that are not used in the
tender, providing existing fundamental shareholders the ability to
maintain their equity ownership;
- The revision and issuance of a complete operating plan
considering current business conditions with a renewed focus on
driving significant operating margin expansion;
- The expansion of the Zendesk Board to ten seats, including the
selection of five qualified Directors by Light Street and other
preferred equity shareholders; and
- The formation of a special committee of the Board to conduct a
thorough process to identify and hire a successor Chief Executive
Officer.
The full text of the letter delivered to the Zendesk Board,
including additional detail regarding Light Street's alternative
proposal to Zendesk can be found at www.lightstreet.com/zen.
About Light Street Capital
Management
Founded in 2010, Light Street Capital Management, LLC is an
investment management firm based in Palo
Alto, California. The firm invests globally in
technology businesses across public and private markets.
Important Information
Light Street, together with the other participants named herein,
intends to file a proxy statement with the Securities and Exchange
Commission (the "SEC") to be used to urge stockholders of Zendesk,
Inc. (the "Company") to vote on the Company's proxy card "AGAINST"
the proposed merger of the Company with affiliates of funds advised
by Hellman & Friedman LLC and Permira Advisers LLC, and other
Company proposals, at the upcoming special meeting of stockholders
of the Company.
LIGHT STREET STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO
READ LIGHT STREET'S PROXY STATEMENT AND OTHER PROXY MATERIALS AS
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS AND ANY OTHER RELEVANT
DOCUMENTS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS
PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT
WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD
BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
STOCKHOLDERS OF THE COMPANY ARE ALSO ADVISED TO READ THE
DEFINITIVE PROXY STATEMENT, DATED AUGUST 8,
2022, AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF
PROXIES BY THE COMPANY FROM ITS STOCKHOLDERS FOR USE AT THE
COMPANY'S UPCOMING SPECIAL MEETING OF STOCKHOLDERS, BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. A DEFINITIVE PROXY STATEMENT
HAS BEEN MAILED TO STOCKHOLDERS OF THE COMPANY AND IS ALSO
AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE
AT WWW.SEC.GOV.
Participant Information
The participants in the proxy solicitation are anticipated to be
Light Street, Light Street Mercury Master Fund, L.P., Light
Street SPV7, L.P., Light Street Tungsten Master Fund, L.P., Light
Street Halo, L.P. and Glen
Kacher.
As of the date hereof, Light Street Mercury Master
Fund, L.P. ("Mercury") directly owns 1,257,571 shares of common
stock, par value $0.01 per share, of
the Company ("Common Stock"), Light Street SPV7, L.P. ("SPV7")
directly owns 1,260,549 shares of Common Stock, Light Street
Tungsten Master Fund, L.P. ("Tungsten Master Fund") directly owns
174,400 shares of Common Stock, and Light Street Halo, L.P.
("Halo") directly owns 33,721 shares of Common Stock. Light
Street, as the investment adviser and general partner of Mercury,
SPV7, Tungsten Master Fund and Halo, exercises voting and
investment power over the Common Stock held for the account of
Mercury, SPV7, Tungsten Master Fund and Halo, and as such may be
deemed to beneficially own the 2,726,241 shares of Common Stock
owned in the aggregate by Mercury, SPV7, Tungsten Master Fund and
Halo. Mr. Kacher, as the Chief Investment Officer of Light
Street, may be deemed to beneficially own the 2,726,241 shares of
Common Stock owned in the aggregate by Mercury, SPV7, Tungsten
Master Fund and Halo.
Forward-looking
Statements
Certain statements contained in this letter, and the documents
referred to in this letter, are forward-looking statements
including, but not limited to, statements that are predications of
or indicate future events, trends, plans or objectives including
the Light Street proposal set forth herein. Undue reliance
should not be placed on such statements because, by their nature,
they are subject to known and unknown risks and
uncertainties. Forward-looking statements are not guarantees
of future performance or activities and are subject to many risks
and uncertainties. Due to such risks and uncertainties, actual
events or results or actual performance may differ materially from
those reflected or contemplated in such forward-looking statements,
including the facts that the Light Street proposal set forth herein
is non-binding and subject to due diligence and the execution of
mutually acceptable definitive documents, may be rejected by the
Company, and/or may be subject to certain closing conditions
including stockholder approval and therefore such proposal may not
be consummated. Forward-looking statements can be identified
by the use of the future tense or other forward-looking words such
as "believe," "expect," "anticipate," "intend," "plan,"
"estimate," "should," "may," "will," "objective," "projection,"
"forecast," "management believes," "continue," "strategy,"
"position" or the negative of those terms or other variations of
them or by comparable terminology.
Important factors that could cause actual results to differ
materially from the expectations set forth in this letter include,
among other things, the factors identified under the section
entitled "Risk Factors" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2021,
as amended, and under the section entitled "Forward-Looking
Statements" in the Company's Definitive Proxy Statement, filed with
the SEC on August 8, 2022. Such
forward-looking statements should therefore be construed in light
of such factors, and Light Street is under no obligation, and
expressly disclaim any intention or obligation, to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Information Regarding Any Proposed
Transaction
In furtherance of the Light Street proposal and subject to
future developments, Light Street (and, if a negotiated transaction
is agreed, the Company) may file one or more registration
statements, proxy statements, tender offer statements or other
documents with the SEC. This letter is not a substitute for any
proxy statement, registration statement, tender offer statement,
prospectus or other document Light Street and/or the Company may
file with the SEC in connection with any proposed transaction.
INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ
ANY SUCH PROXY STATEMENT(S), REGISTRATION STATEMENT, TENDER OFFER
STATEMENT, PROSPECTUS AND/OR OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT A PROPOSED
TRANSACTION. Any definitive proxy statement(s) or prospectus(es)
(if and when available) will be mailed to stockholders of the
Company. Investors and security holders will be able to
obtain free copies of these documents (if and when available) and
other documents filed with the SEC by Light Street and/or the
Company through the SEC's web site at www.sec.gov.
This letter is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, Light Street and/or its
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies in respect of any proposed transaction. Additional
information regarding the interests of such potential participants
may be included in one or more registration statements, proxy
statements, tender offer statements or other documents filed with
the SEC if and when they become available. These documents (if and
when available) may be obtained at no charge on the SEC's website
at www.sec.gov.
Notice to Investors
Notwithstanding anything stated herein, Light Street reserves
the right to sell shares of the Company in the future in connection
with redemption requests by investors in its affiliated funds or in
the event the Company's Board of Directors is not responding, in
the opinion of Light Street, appropriately to the Light Street
proposal and it is in such funds' interests to do so.
Media Contacts
ASC Advisors
Steve
Bruce / Taylor Ingraham
sbruce@ascadvisors.com / tingraham@ascadvisors.com
{203} 992-1230
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SOURCE Light Street Capital Management