DEFA14A: Zuora to be Acquired by Silver Lake and GIC for $1.7 Billion

Zuora, Inc. has entered into a definitive agreement to be acquired by Silver Lake and GIC for $10.00 per share in cash, valuing the transaction at $1.7 billion.

Summary

• Zuora, Inc. has agreed to be acquired by Silver Lake and GIC in a deal valued at $1.7 billion.
• Silver Lake and GIC will acquire all outstanding shares of Zuora common stock for $10.00 per share in cash.
• This represents an 18% premium to Zuora's unaffected closing stock price as of April 16, 2024, and a 20% enterprise value premium.
• The transaction is expected to close in the first calendar quarter of 2025, pending customary approvals.
• Zuora's Founder, CEO, and Chairman of the Board, Tien Tzuo, will roll over a majority of his existing ownership and continue to lead the company.
• Upon completion, Zuora will become a privately held company and its stock will no longer be listed on any public exchange.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the acquisition at a premium, the continued leadership of the CEO, and the backing of experienced investors. While Zuora will become private, the overall tone suggests a beneficial outcome for stakeholders.

Positives

• The acquisition provides Zuora stockholders with significant, immediate, and certain value.
• The per share price represents an 18% premium to the unaffected closing stock price.
• Tien Tzuo will remain CEO, ensuring continuity in leadership.
• Silver Lake and GIC bring expertise and support to Zuora's next phase of growth.
• The transaction is not subject to a financing condition, increasing the likelihood of completion.

Negatives

• Zuora will become a private company, and its stock will no longer be publicly traded.
• The company will be subject to restrictions during the pendency of the proposed transaction that may impact the company's ability to pursue certain business opportunities or strategic transactions.

Risks

• The transaction is subject to customary closing conditions and approvals, including regulatory and stockholder approvals.
• Potential delays in consummating the proposed transaction could occur.
• The possibility exists that Zuora's stockholders may not approve the proposed transaction.
• There is a risk of potential litigation relating to the proposed transaction.
• Disruptions from the proposed transaction could harm Zuora's business.
• The company may face challenges in retaining and hiring key personnel.
• Adverse reactions or changes to business relationships could result from the announcement or completion of the proposed transaction.

Future Outlook

Zuora expects to become a privately held company in the first calendar quarter of 2025, with Tien Tzuo continuing to lead the company. The company anticipates that with the support of Silver Lake and GIC, it will be well-positioned for long-term success and continued market leadership in monetization solutions.

Management Comments

• Tien Tzuo stated that as a private company, with the support and expertise of Silver Lake and GIC, Zuora's monetization suite will continue to lead in the marketplace.
• Jason Pressman said that the agreement represents the culmination of a comprehensive process to determine the best path to maximizing value for Zuora stockholders.
• Joe Osnoss and Mike Widmann stated that the investment underscores their confidence in Zuora as the clear leader of monetization solutions for modern recurring revenue businesses.
• Choo Yong Cheen and Eric Wilmes stated that Zuora's products and experience position it for continued market leadership.

Industry Context

The acquisition reflects the ongoing interest in subscription-based business models and the software solutions that support them. Private equity firms are increasingly investing in companies that enable recurring revenue streams, indicating a strong belief in the long-term growth potential of this sector.

Comparison to Industry Standards

• The 18% premium to Zuora's unaffected closing stock price is within the typical range for acquisitions of publicly traded software companies.
• Similar transactions in the software space have seen premiums ranging from 15% to 30%, depending on the company's growth prospects and market position.
• Companies like Thoma Bravo and Vista Equity Partners have also been active in acquiring software companies with recurring revenue models.
• The involvement of Silver Lake and GIC, both large and experienced technology investors, suggests a strong belief in Zuora's potential for future growth and profitability.

Stakeholder Impact

• Stockholders will receive $10.00 per share in cash.
• Employees will continue to be led by Tien Tzuo.
• Customers can expect continued service and innovation from Zuora.
• The acquisition could lead to new opportunities for suppliers and partners.

Next Steps

• Zuora will file a proxy statement and Schedule 13E-3 with the SEC.
• Zuora's stockholders will vote on the proposed transaction.
• The parties will seek required regulatory approvals.
• The transaction is expected to close in the first calendar quarter of 2025.

Key Dates

Keywords

acquisition, Zuora, Silver Lake, GIC, merger, private equity, monetization, subscription economy