MOMENTIVE GETS A BUYOUT OFFER

By Nigam Arora & Dr. Natasha Arora

Momentive (MNTV)  has received a $28 buyout offer from Zendisk (ZEN).  This buyout is the 168th buyout of an Arora Portfolio company.  The low band of our target was $28.  The offer is an all-stock offer for MNTV stockholders to receive 0.225 shares of ZEN for each share of MNTV.  Based on the closing price of ZEN, this represented $28.

Wall Street has uniformly come out against ZEN for buying MNTV.  The reason is that MNTV is growing slower than ZEN. The fashion on Wall Street these days is growth.  The concern is that the combined company will grow slower than ZEN alone.

Due to Wall Street downgrades, ZEN stock has fallen by $24.01 to $95.  For this reason, MNTV stock is trading at $22 as of this writing.

What To Do Now

The key question is if ZEN stock will recover from this massive loss.  If the overall market for cloud stocks stays strong as it has been since the pandemic low, there is a high probability of ZEN recovering, at least partially.

What to do now is a matter of personal preference.

If you do decide to hold, be sure to have stops in the zone of $17.11 – $17.23.

For tracking purposes, a 10% tranche will be sold right here and the remaining 20% held.

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This post was just published on ZYX Buy Change Alert.

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Nigam Arora

Nigam Arora

Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.

Dr. Natasha Arora

Dr. Natasha Arora

Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.

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