A Fight Rooted in Activist Pressure
At the heart of the dispute was whether Zendesk’s board and then-CEO Mikkel Svane engineered the sale to private equity firms Hellman & Friedman LLC and Permira Advisers LLC to sidestep a looming proxy battle with activist investor Jana Partners LLC.
Jana’s campaign was seen as threatening Svane’s position and those of three directors. Stockholders who sued—including a public employee union and individual investors—alleged that Svane and others accepted a $77.50 per share buyout to save their jobs, while concealing critical details.
The plaintiffs argued the proxy statement omitted a nearly finalized settlement with Jana that would have required Svane’s departure, and failed to disclose more optimistic margin and cost-cutting projections. Instead, they claimed the board slashed revenue forecasts by $13 billion “over a weekend” to justify abandoning a standalone growth strategy.
Fiery Arguments Before the Court
During September arguments, Ned Weinberger of Labaton Keller Sucharow LLP, representing stockholders, told justices the proxy failed to tell the “full and accurate story” of the board’s conflicts. “The conflict that is at the heart of this case … was not disclosed to stockholders,” he said.
Defending Svane and the board, Sandra C. Goldstein of Kirkland & Ellis LLP countered that Jana’s agitation was already “all over the proxy” and settlement talks were adequately disclosed. “I don’t think we have to literally write every term and condition,” she told the justices.
