Exhibit 99.2
Zendesk, Inc. Announces Pricing of Offering of $1.0 billion of Convertible Senior Notes
San Francisco –June 12, 2020 – Zendesk, Inc. (NYSE: ZEN) (“Zendesk”) today announced the pricing of $1.0 billion aggregate principal amount of Convertible Senior Notes due 2025 (the “Notes”) in a private offering (the “Offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Zendesk also granted the initial purchasers of the Notes an option to purchase up to an additional $150 million aggregate principal amount of the Notes. The sale of the Notes is expected to settle on June 16, 2020, subject to customary closing conditions, and is expected to result in approximately $979.0 million (or approximately $1.126 billion if the initial purchasers exercise their option to purchase additional Notes in full) in net proceeds to Zendesk after deducting the initial purchasers’ discount and estimated offering expenses payable by Zendesk.
The Notes will be senior, unsecured obligations of Zendesk. The Notes will bear interest at a rate of 0.625% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020. The Notes will mature on June 15, 2025, unless earlier converted, redeemed or repurchased. Zendesk may not redeem the Notes prior to June 20, 2023. Zendesk may redeem for cash all or any portion of the Notes, at its option, on or after June 20, 2023 and on or prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of Zendesk’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which Zendesk provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Zendesk provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Notes will be convertible at an initial conversion rate of 9.1944 shares of Zendesk’s common stock, per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $108.76 per share, which represents a conversion premium of approximately 32.5% over the volume-weighted average price including the close of Zendesk’s common stock on The New York Stock Exchange on June 11, 2020).
Prior to the close of business on the business day immediately preceding March 15, 2025, the Notes will be convertible at the option of the holders of the Notes only upon the satisfaction of specified conditions and during certain periods. On or after March 15, 2025 until the close of business on the second scheduled trading day preceding the maturity date, the Notes will be convertible at the option of the holders of the Notes at any time regardless of these conditions. Conversions of the Notes will be settled in cash, shares of Zendesk’s common stock, or a combination thereof, at Zendesk’s election.
In connection with the pricing of the Notes, Zendesk entered into privately negotiated capped call transactions with respect to Zendesk’s common stock with the initial purchasers of the Notes and other financial institutions (the “Option Counterparties”). The capped call transactions are expected generally to reduce potential dilution to Zendesk’s common stock upon any conversion of Notes and/or offset any potential cash payments Zendesk is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions will initially be approximately $164.17 per share, which represents a premium of 100% over the volume-weighted average price including the close of Zendesk’s common stock on June 11, 2020, and is subject to certain adjustments under the terms of the capped call transactions.
Zendesk expects that, in connection with establishing their initial hedges of the capped call transactions, the Option Counterparties or their respective affiliates will enter into various derivative transactions with respect to Zendesk’s common stock and/or purchase shares of Zendesk’s common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of Zendesk’s common stock or the Notes at that time. In addition, Zendesk expects that the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Zendesk’s common stock and/or by purchasing or selling Zendesk’s common stock or other securities of Zendesk in secondary market transactions from time to time prior to the maturity of the Notes (and are likely to do so on each exercise date for the capped call transactions, which are expected to occur on each trading day during the 40 trading day period beginning on the 41st scheduled trading day prior to the maturity date of the Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Notes). This activity could also cause or avoid an increase or a decrease in the market price of Zendesk’s common stock or the Notes, which could affect the ability of holders of Notes to convert the Notes and,
