DEFA14A: Zuora to be Acquired by Silver Lake and GIC for $10 Per Share in Cash Deal

Zuora, Inc. announces a definitive agreement to be acquired by Silver Lake and GIC for $10 per share in cash, expected to close in the first calendar quarter of 2025.

Summary

• Zuora, Inc. has entered into an agreement to be acquired by private investment funds affiliated with Silver Lake and GIC.
• The acquisition will be executed through a merger with Zodiac Acquisition Sub, Inc., a subsidiary of Zodiac Purchaser, L.L.C.
• Zuora stockholders will receive $10.00 in cash for each share of Zuora stock they own upon closing of the transaction.
• The transaction is expected to close in the first calendar quarter of 2025, pending customary closing conditions and approvals.
• Following the transaction, Zuora will become a privately held company and will no longer be listed on the New York Stock Exchange.
• Zuora will continue to be headquartered in Redwood City and led by Tien.
• Unvested equity awards will be converted into cash payment rights based on a $10 per share valuation.
• No new offerings or purchase periods will commence under the Employee Stock Purchase Plan (ESPP) and the exercise date for the current offering or purchase period will be no later than December 16th.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The acquisition provides a clear exit strategy for shareholders at a premium, and the company will benefit from the expertise and resources of Silver Lake and GIC. However, there are inherent risks associated with the transaction and the transition to a private company.

Positives

• Stockholders will receive $10.00 in cash for each share of Zuora stock.
• Unvested RSUs will be converted into cash payment rights, ensuring employees receive value for their equity.
• Zuora will continue to operate under the same name and brand.
• Zuora will remain headquartered in Redwood City.
• Tien will continue to lead the company.
• Silver Lake and GIC have a proven track record helping technology companies achieve growth.
• The final FY25 bonus payment will reflect performance against annual goals.

Negatives

• Zuora will no longer be a publicly traded company.
• Stock options with an exercise price equal to or greater than $10.00 per share will be canceled for no consideration.
• Employees will no longer be able to participate in the ESPP after October 17, 2024.
• Zuora will no longer share quarterly earnings reports publicly or hold quarterly earnings calls after the transaction closes.

Risks

• The transaction is subject to customary closing conditions and approvals, including approval by Zuora stockholders and regulatory approvals, and may not be completed.
• Potential delays in consummating the proposed transaction could occur.
• The Company's stockholders may not approve the proposed transaction.
• Disruptions from the proposed transaction could harm the Company's business.
• The Company may face challenges in retaining and hiring key personnel.
• Legislative, regulatory and economic developments could affect the Company's business.
• Potential business uncertainty during the pendency of the proposed transaction could affect the Company's financial performance.
• Restrictions during the pendency of the proposed transaction may impact the Company's ability to pursue certain business opportunities or strategic transactions.

Future Outlook

The transaction is expected to close in the first calendar quarter of 2025, subject to customary closing conditions and approvals.

Management Comments

• Silver Lake and GIC recognize that our people are the foundation of our success, and they are committed to helping us maintain our ZEO culture.
• We are confident that Silver Lake and GIC are the right partners to help us capture the huge opportunities we see ahead in the market.
• We view this transaction as an expansion of our long-standing partnership, one which will allow us to benefit from their additional focus and support as we continue delivering on our strategic priorities.

Industry Context

Private equity firms are increasingly targeting established technology companies with recurring revenue models, like Zuora, to take them private and drive long-term growth away from the scrutiny of public markets.

Comparison to Industry Standards

• The $10 per share acquisition price represents a premium to Zuora's recent trading price, but it's crucial to compare this to similar SaaS companies acquired by private equity firms.
• Companies like Vista Equity Partners and Thoma Bravo have historically acquired SaaS businesses at multiples of revenue, and the Zuora deal should be assessed against these benchmarks.
• Comparable transactions include Silver Lake's previous investments in technology companies like Dell and GoDaddy, which can provide context for the potential strategic direction of Zuora post-acquisition.

Stakeholder Impact

• Shareholders will receive $10 per share in cash.
• Employees will have their unvested equity awards converted into cash payment rights.
• Customers and partners are told to expect business as usual.
• The company will continue to operate under the same name and brand.

Next Steps

• Zuora will file a proxy statement with the SEC.
• Zuora stockholders will vote on the proposed transaction.
• The transaction is subject to regulatory approvals.
• The transaction is expected to close in the first calendar quarter of 2025.

Key Dates

Keywords

acquisition, merger, Zuora, Silver Lake, GIC, stockholders, equity awards, transaction, private company, ESPP