Zendesk says Light Street’s proposal not superior to $10.2 bln go-private deal

Zendesk Inc (ZEN.N) said on Thursday the proposal made by investor Light Street Capital Management to remain a standalone public company and find a new boss was not “superior” to a $10.2 billion takeover offer from Hellman & Friedman and Permira.

In a letter to Zendesk’s board on Monday, Light Street proposed a recapitalization of the business. The plan consists of a $2 billion preferred equity investment arranged by Light Street and a $2 billion incremental debt facility.

The investment firm also suggested that the software maker issue a $5 billion tender offer at $82.50 per share for shareholders who would like to sell their shares.

Light Street added that Zendesk should expand its board to ten seats, including five directors from Light Street and other preferred equity shareholders.

Zendesk said Light Street’s proposal vas vague and would result in uncertain value and an increase in operational, financial and governance risks.

“The company will continue to advance toward completing the transaction with the consortium …,” added Zendesk, which makes communication software for businesses.

Light Street, which manages funds that own more than 2% of Zendesk.

Zendesk separately said that macroeconomic conditions and business momentum have continued to weaken since the go-private deal announcement in late-June from the consortium, which includes private equity firms Hellman & Friedman and Permira.