An activist investor on Monday promised to fight the proposed sale of SuveyMonkey owner Momentive Global Inc. to Zendesk Inc.
Legion Partners Asset Managers, the Los Angeles firm that pushed for a sale in September, said the projected $4.1 billion value of the deal is too low and that it has serious concerns about the quality of the sales process. It also called for a "significant upgrade" of Momentive's board.
“Legion Partners is strongly against the proposed acquisition of Momentive by Zendesk and is willing do to whatever is necessary to put an end to this deal,” the firm told Bloomberg. Legion Partners controls 1.4% of San Mateo-based Momentive (Nasdaq:MNTV).
The stocks of both Momentive and San Francisco-based ZenDesk (NYSE:ZEN) dropped sharply since their deal was announced. Momentive was down by about 8% at the close of trading on Monday. Zendesk is down by about 15%.
The deal was estimated to be worth about $28 a share to Momentive's shareholders, a premium of about 12%. But Legion Partners has projected that a sale could fetch as much as $40 a share. Momentive closed Monday at $22.90.
Momentive told Bloomberg that it agreed to the sale after a comprehensive review that determined it was the best outcome for its investors.
"The combination will provide the opportunity for Momentive shareholders to participate in the upside potential of a stronger and larger company that will be uniquely positioned to help customers drive meaningful action," the company said. "We are committed to closely engaging with our shareholders to ensure they recognize the significant value inherent in the combination."
Legion isn't the only investor with questions about the sale, with a number of law firms putting out press releases saying they have begun collecting investors for class action lawsuits.
Oleg Karmanov, a junior portfolio manager at Cannell Capital, told Bloomberg that he is concerned about the price and the sales process. His firm held about a 0.6% stake in Momentive as of June 30, Bloomberg said.
"The market has said it is worried about this transaction," Karmanov said. "Something isn’t right here."
