PE consortium to acquire Zendesk for $10.2bn

BY Richard Summerfield

Zendesk Inc. has agreed to be acquired by an investor group led by leading global investment firms Permira and Hellman & Friedman LLC in an all-cash $10.2bn deal.

Under the terms of the agreement, Zendesk shareholders will receive $77.50 per share held, a premium of approximately 34 percent over Zendesk’s closing stock price on 23 June 2022, the last full trading day prior to the announcement of the deal.

Zendesk, founded in Copenhagen in 2007 and now headquartered in San Francisco, is a service-first CRM company that builds software designed to improve customer relationships. According to its website, the company operates in 160 countries and employs around 5,450 people globally.

“This is the start of a new chapter for Zendesk with partners that are aligned with the strength of our agile products and talented team, and are committed to providing the resources and expertise to continue our growth trajectory,” said Mikkel Svane, founder, chairman and chief executive of Zendesk. “With Hellman & Friedman and Permira’s support, we’ll continue to execute on our long-term strategy with our customers as our top priority, taking full advantage of the opportunity we see to help businesses navigate the ever changing expectations and demands of their customers.”

“Zendesk has reimagined customer service software and empowers businesses to transform how they communicate with their customers in an increasingly digital world,” said Ryan Lanpher, a partner at Permira. “We believe Zendesk is uniquely positioned to enable meaningful interactions and deliver compelling business outcomes across any channel.”

“We look forward to partnering with Zendesk’s management team and talented employees to help them accelerate product innovation and achieve their growth ambitions,” said Brian Ruder, a partner and co-head of technology at Permira.

“Over the past 15 years, Zendesk has revolutionized how companies serve their customers and has become a leading platform within the customer experience ecosystem,” said Tarim Wasim, a partner at Hellman & Friedman. “We deeply believe in the company’s growth opportunity as it continues to help businesses across the world delight their customers.”

“We see tremendous value in Zendesk’s platform and ability to grow at scale,” said Stephen Ensley, a partner at Hellman & Friedman. “Its intuitive yet powerful offering serves over 100,000 companies, ranging from the smallest businesses to the largest enterprises.”

Zendesk has been subject to considerable private equity interest this year. In February 2022, the company announced that it had rejected an unsolicited $17bn proposal from a consortium of private equity firms to acquire all of Zendesk’s outstanding shares in an all-cash transaction valued at $127-$132 per share. The offer was rebuffed by Zendesk as, according to a statement from the company’s board of directors, it “significantly undervalues the company and is not in the best interests of the company and its shareholders”.

News: Zendesk drama concludes with $10.2 billion private equity acquisition

Mondelēz International agrees $2.9bn Clif Bar acquisition

BY Richard Summerfield

Mondelēz International has agreed to acquire US organic energy-bar maker Clif Bar & Co. for $2.9bn as part of a plan to boost its snacks segment. The acquisition is subject to customary closing conditions and expected to close in Q3 2022, pending regulatory review.

“We are thrilled to welcome Clif Bar & Company’s iconic brands and passionate employees into the Mondelēz International family,” said Dirk Van de Put, chairman and chief executive of Mondelēz International. “This transaction further advances our ambition to lead the future of snacking by winning in chocolate, biscuits and baked snacks as we continue to scale our high-growth snack bar business. As a leader and innovator in well-being and sustainable snacking in the US, Clif Bar & Company embodies our purpose to ‘empower people to snack right’ and we look forward to advancing this important work with Clif’s committed colleagues in the years ahead.”

According to a statement announcing the deal, the transaction is expected to be top-line accretive in year two and create cost synergies by using Mondelēz International’s global and North American scale to expand Clif Bar’s sales distribution and gain further penetration with existing and new customers and channels in the US. Mondelēz will continue to manufacture Clif’s products in its facilities at Twin Falls, Idaho and Indianapolis, Indiana, the company noted. Clif Bar will remain headquartered in Emeryville to nurture “its entrepreneurial spirit” and maintain the brand’s purpose and authenticity.

“Mondelēz International is the right partner at the right time to support Clif in our next chapter of growth,” said Sally Grimes, chief executive of Clif Bar. “Our purposes and cultures are aligned and being part of a global snacking company with broad product offerings can help us accelerate our growth while staying true to our deeply ingrained Five Aspirations - sustaining our people, planet, community, business, and brands - five bottom lines that have grounded our company since its founding and will remain our North Star going forward.”

Mondelēz International has completed a number of acquisitions in recent years. Upon completion, it will be the company’s ninth acquisition since 2018. Other companies acquired include Ricolino, Chipita, Gourmet Food Holdings, Hu, Give and Go, Perfect Snacks and Tate’s Bake Shop.

News: Mondelez to buy energy bar maker Clif Bar for about $3 billion

Makeup giant Revlon files for Chapter 11

BY Fraser Tennant

Weighed down by debt load, pandemic-related disruptions to its supply chain network and escalating costs, cosmetic maker Revlon, along with certain of its subsidiaries, has filed for Chapter 11 bankruptcy protection.

The company has also experienced stiffer competition as well as struggling to keep pace with changing beauty tastes.

The Chapter 11 filing is intended to allow Revlon to strategically reorganise its legacy capital structure and improve its long-term outlook, especially amid liquidity constraints brought on by continued global challenges, as well as obligations to its lenders.

Upon receipt of court approval, the company expects to receive $575m in debtor-in-possession (DIP) financing from its existing lender base, which in addition to its existing working capital facility, will provide liquidity to support day-to-day operations.

In addition, Revlon has said strong support by its lenders will help the business manage through current macroeconomic challenges and, in turn, enable it to better serve customers.

“Today’s filing will allow Revlon to continue to offer the iconic products we have delivered for decades, while providing a clearer path for our future growth,” said Debra Perelman, president and chief executive of Revlon. “Consumer demand for our products remains strong – people love our brands, and we continue to have a healthy market position.”

According to the filing, Revlon has assets and liabilities between $1bn and $10bn. None of Revlon’s international operating subsidiaries are included in the US Chapter 11 proceedings, except Canada and the UK.

“Our challenging capital structure has limited our ability to navigate macroeconomic issues in order to meet this demand,” added Ms Perelman. “By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognised brands.”

Since its breakthrough launch of the first opaque nail enamel in 1932, Revlon has provided consumers with high quality product innovation, performance and sophisticated glamour. Today, Revlon’s diversified portfolio of brands is sold in approximately 150 countries around the world.

Ms Perelman concluded: “We are committed to ensuring the reorganisation is as seamless as possible for our key stakeholders, including our employees, customers and vendors, and we appreciate their support during this process.”

News: Revlon files for bankruptcy, blames supply chain snags

Prologis to merge with Duke Realty in $26bn deal

BY Fraser Tennant

In a combination that brings together two rivals, warehouse giant Prologis and real estate agency Duke Realty Corporation are to merge in an all-stock transaction valued at approximately $26bn, including the assumption of debt.

Under the terms of the definitive agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own. The respective board of directors for Prologis and Duke Realty have unanimously approved the transaction.

“We have admired the disciplined repositioning strategy the Duke Realty team has completed over the last decade,” said Hamid R. Moghadam, co-founder and chief executive of Prologis. “They have built an exceptional portfolio in the US located in geographies we believe will outperform in the future. That will be fuelled by Prologis' proven track record as a value creator in the logistics space. We have a diverse model that allows us to deliver even more value to customers.”

With the transaction, Prologis is gaining high-quality properties for its portfolio in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta. The portfolio comprises: (i) 153 million square feet of operating properties in 19 major US logistics geographies; (ii) 11 million square feet of development in progress; and (iii) 1228 acres of land owned and under option with a build-out of approximately 21 million square feet.

"This transaction is a testament to Duke Realty's world-class portfolio of industrial properties, long-proven success and sustainable value creation we’ve delivered over the years," said Jim Connor, chairman and chief executive of Duke Realty. “We have always respected Prologis, and after a deliberate and comprehensive evaluation of the transaction and the improved offer, we are excited to bring together our two complementary businesses.

“Together, we will be able to accelerate the potential of our business and better serve tenants and partners,” continued Mr Connor. “We are confident that this transaction – including the meaningful opportunity it provides for shareholders to participate in the growth and upside from the combined portfolio — is in the best long-term interest of Duke Realty shareholders."

The transaction, which is currently expected to close in the fourth quarter of 2022, is subject to the approval of Prologis and Duke Realty shareholders and other customary closing conditions.

“This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth,” concluded Tim Arndt, chief financial officer at Prologis. “In addition to generating significant synergies, the combination of these portfolios will help us deliver more services to our customers and drive incremental long-term earnings growth.”

News: Warehouse giant Prologis agrees $26 bln merger with Duke Realty

Cyber security: a race against time

BY Richard Summerfield

According to a report from Crossword Cybersecurity Plc, 61 percent of chief information security officers (CISOs) are only ‘fairly confident’ of managing their current threat exposure to cyber risks.

The report, ‘Strategy and collaboration: a better way forward for effective cybersecurity’, surveyed of over 200 CISOs and senior UK cyber security professionals. Many respondents identified the ‘perfect storm’ of escalating cyber attacks combined with global tech innovation which is causing cyber security professionals to be less confident of the adequacy of their cyber security provisions. Based on the findings, there is concern that cyber security strategies are not able to keep pace with the rate of tech innovation and changes in the threat landscape.

“The picture painted by our research shows CISOs are in urgent need of a strategic rethink,” said Stuart Jubb, group managing director at Crossword Cybersecurity plc. “CISOs need to balance their cybersecurity operation’s daily load with managing the organisation’s long-term requirements. Boards must make sure CISOs have the budget necessary to get short-term issues under control and then begin planning a long-term business-wide strategy. Such a strategy should be supported by a standard operating model with robust processes and policies for the company’s entire supply chain. Every month of delay leaves businesses open to potentially crippling cyberattacks.”

Crossword also asked CISOs about the technology trends they saw as being the most important and relevant over the next 12 months. Several technology categories stood out, with cloud transition and cyber in the cloud leading the way (41 percent), followed by cyber security mesh architecture (CSMA) (35 percent) and artificial intelligence (AI)/machine learning (31 percent).

Respondents also identified a number of other areas of high priority going forward, including closing the cyber skills gap, which can see IT and cyber security teams become quickly overwhelmed if the right expertise is not in place to manage the load, the challenge of gaining consistent and reliable ‘threat intelligence’, and securing digital identity. Respondents were divided over how to address these and other issues, particularly with respect to companies’ short-term cyber goals and the longer-term strategy of many UK organisations.

Report: Strategy and collaboration: a better way forward for effective cybersecurity