Momentive (MNTV) Surges on Potential Sale, with P/E Seen as Most Likely Buyers

October 19, 2022 11:24 AM EDT
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Price: $9.45 --0%

Rating Summary:
    0 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 20 | New: 31
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Shares of Momentive Global Inc. (NASDAQ: MNTV), the operator of SurveyMonkey, rose 18% Wednesday following a report from Bloomberg News that the company is exploring a sale after receiving takeover interest.

Today's news follows an ill-fated takeover deal in 2021 between the company and Zendesk (NYSE: ZEN), where Zendesk was to acquire the company in an all-stock deal. Zendesk shareholders rejected the takeover earlier this year amid activist pressure and its own sale prospects. Zendesk agreed to be acquired by private equity firm's Permira and Hellman & Friedman LLC this summer for $10.2 billion, or $77.50 per share.

Notably, Permira was also interested in acquiring Momentive Global before the doomed agreement with Zendesk.

Analysts see private equity as the most likely acquirer of Momentive at this point.

"We note that multiple private equity firms were circling the company during its last deal process, and we believe that is the more likely route the company would take in a sale versus a strategic deal," Stifel analyst J. Parker Lane said. The analyst rates shares at Hold with an $8 price target (up from $7).

Meanwhile, Craig-Hallum analyst Chad Bennett highlighted that the recent emphasis on driving margin expansion, including its 11% reduction in workforce announced last week, makes the company more attractive to potential bidders. He rates the stock a Buy with a $10.50 price target.

Looking back at its deal with Zendesk, Momentive agreed to a price of 0.225 shares of Zendesk stock for each share of Momentive stock. When the deal was struck in 2021, it was worth approximately $27.60 per share to Momentive shareholders. However, both stocks have dropped precipitously since that time. Assuming that Momentive shareholders value their stock similar to the decline in Zendesk, a deal could still be valued at $17.44 per share. This is calculated using Zendesk's private equity takeover price of $77.50 multiplied by the past 0.225 shares of Zendesk stock for each share of Momentive stock. Shares of Momentive currently trade at $7.70.

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