Legion Pushes SurveyMonkey Parent Momentive to Sell

(Bloomberg) -- Activist investor Legion Partners Asset Management is calling for a strategic review including a potential sale of Momentive Global Inc., the parent of online polling software firm SurveyMonkey.

The Los Angeles-based investment firm, which owns a 1.4% stake in Momentive, is also threatening a boardroom battle at the company if it doesn’t engage in a meaningful way. 

Legion wrote a letter to Momentive’s board last month urging it to hire a bank to run a review with the goal of addressing the company’s underperformance. It said in an investor presentation Wednesday it believes there would be several private equity firms and strategic players interested, and that Momentive could fetch as much as $40 a share in sale, more than double where it is trading today. 

Momentive rose 2.2% to $20.34 at 1:04 p.m. in New York on Wednesday, giving the company a market value of about $3 billion. The shares have fallen about 21% this year. 

“We believe this step should be taken promptly and concurrently with operational efforts aimed at closing the company’s valuation gap,” Legion Managing Directors Chris Kiper and Ted White said in the letter dated Sept. 21, a copy of which was obtained by Bloomberg. “We believe it is prudent for the board to have a robust and objective strategic alternatives process as its efforts to obtain appropriate valuation have failed thus far.”  

Legion has also called for one of its senior analysts, Sagar Gupta, to be appointed to Momentive’s board. If the company fails to engage, Legion said it is prepared to nominate a slate of directors at this year’s annual general meeting, according to the investor presentation. 

Legion said Momentive’s lagging returns are a direct result of the “board’s poor governance, oversight and inability to take strategic action to drive stockholder value.” It argues the company is now trading at a significant discount to peers as result. 

A representative for Momentive wasn’t immediately available for comment. 

In addition to the review and board refreshment, Legion has also called for a series of measures to address lingering issues at the company. 

That includes enhancing its financial disclosures, holding an investor day and addressing its “poorly designed” executive compensation. Legion also wants to company to publicly commit to declassifying its board, so all directors would stand for re-election each year. Shareholders supported a proposal to declassify its board at the 2021 annual general meeting but Momentive has yet to say whether it will implement the measures. 

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