DEFA14A: Zuora to be Acquired by Silver Lake and GIC for $10.00 per Share, Taking the Subscription Management Platform Private

Zuora, Inc. has entered into an agreement to be acquired by Silver Lake and GIC, with Zuora becoming a privately held company at a price of $10.00 per share.

Summary

• Zuora, Inc. has announced an agreement to be acquired by Silver Lake and GIC.
• Upon completion of the transaction, Zuora will become a privately held company.
• The merger is expected to close in the first calendar quarter of 2025, pending customary approvals, including stockholder approval.
• Silver Lake and GIC will acquire Zuora for $10.00 per share in cash.
• Zuora's CEO, Tien Tzuo, will continue to lead the company after the transaction closes.
• The company emphasizes that its mission, strategy, values, and culture will remain unchanged.
• Employees who are stockholders will receive $10.00 in cash for each share of Zuora stock they own upon closing of the transaction.
• Stock options with an exercise price below $10.00 will be cashed out for the difference, while options at or above $10.00 will be canceled for no consideration.
• Restricted stock units (RSUs) will be canceled in exchange for $10.00 per share, vesting according to the existing schedule.
• Performance stock units (PSUs) that have been earned will be cashed out at $10.00 per share.
• No new offering or purchase period will commence under the ESPP, and the exercise date for the current period will be no later than December 16th.
• Shares purchased under the ESPP will be exchanged at closing for the right to receive $10.00 in cash.

Sentiment

Score: 7

Explanation: The document conveys a positive outlook regarding the acquisition, emphasizing the benefits of becoming a private company with the support of experienced investors. While there are inherent risks in any transaction, the overall tone is optimistic and forward-looking.

Positives

• Zuora will become a private company with the backing of Silver Lake and GIC, potentially allowing for more strategic flexibility and long-term investment.
• The acquisition provides a cash payout of $10.00 per share for stockholders.
• The company's leadership and core mission are expected to remain the same.
• Silver Lake and GIC have a track record of helping technology companies achieve growth.
• Employees with stock options below $10.00 will receive a cash payment for the difference.
• The company emphasizes a commitment to maintaining its culture and values.
• Zuora will remain headquartered in Redwood City following close.

Negatives

• Zuora will cease to be a publicly traded company.
• Stockholders will no longer participate in the potential future growth of Zuora beyond the $10.00 per share payout.
• Stock options with an exercise price equal to or greater than $10.00 per share will be canceled for no consideration.
• There is a risk that the transaction may not close, or may be delayed.
• Employees may experience uncertainty during the transition period.

Risks

• The transaction is subject to customary closing conditions, including approval by Zuora stockholders, and may not be completed.
• Potential delays in obtaining required governmental and regulatory approvals could delay or prevent the 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's ability to retain and hire key personnel could be affected.
• Adverse reactions or changes to business relationships could result from the announcement or completion of the transaction.
• Restrictions during the pendency of the proposed transaction may impact Zuora's ability to pursue certain business opportunities or strategic transactions.
• The final FY25 bonus payment may be paid in cash for everyone depending on the timing of when this transaction closes.

Future Outlook

Zuora anticipates becoming a privately held company in the first calendar quarter of 2025, subject to customary closing conditions and approvals, with the expectation of accelerating its ability to serve customers with the support of Silver Lake and GIC.

Management Comments

• Tien Tzuo, CEO of Zuora, stated that this is a significant milestone and a testament to the phenomenal company they have built together.
• Tien Tzuo assured employees that nothing changes today and their work and focus continue as before.
• Tien Tzuo emphasized that Silver Lake and GIC are investing in Zuora because they believe in and want to help accelerate their vision.
• Tien Tzuo will continue as CEO following the close of the transaction.
• Management believes that as a private company, Zuora will have strategic flexibility to enhance its products and services.
• Management is confident that Silver Lake and GIC are the right partners to help Zuora capture the huge opportunities they see ahead in the market.

Industry Context

The acquisition reflects a trend of private equity firms investing in established technology companies to drive growth and innovation outside the pressures of the public market. Silver Lake's and GIC's involvement suggests a belief in the long-term potential of the subscription economy and Zuora's role in it.

Comparison to Industry Standards

• Silver Lake has a track record of successful investments in technology companies, including Dell, GoDaddy, and Motorola.
• GIC has achieved successes in companies like ByteDance, Affirm, and DoorDash.
• The take-private transaction is similar to other deals where private equity firms acquire publicly traded companies to implement strategic changes and drive long-term value creation.

Stakeholder Impact

• Shareholders will receive $10.00 per share in cash.
• Employees are assured that the company's culture and values will remain the same.
• Customers and partners are assured that it will be business as usual and they should see no changes to the way they work together.
• The company believes that the transaction will position them to be an even stronger partner to customers and partners moving forward.

Next Steps

• Zuora will file a proxy statement with the SEC.
• Zuora and affiliates will jointly file a transaction statement on Schedule 13E-3.
• Zuora stockholders will vote on the proposed transaction.
• The transaction is expected to close in the first calendar quarter of 2025, subject to customary closing conditions and approvals.
• Global Business Update Meetings will be held on October 17th and 18th to provide more information to employees.
• Each Ecomm function will host their own Town Halls over the course of the next week to listen to and address questions and hear thoughts.

Key Dates

Keywords

acquisition, Silver Lake, GIC, Zuora, private company, merger, stockholders, transaction, subscription economy