DEFA14A: Zuora to be Acquired by Silver Lake and GIC in $10 Per Share Deal, Transitioning to Private Ownership

Zuora, Inc. will be acquired by private investment funds affiliated with Silver Lake Group and GIC for $10 per share, transitioning the company to private ownership.

Summary

• Zuora, Inc. is set to be acquired by Zodiac Purchaser, L.L.C., which is indirectly controlled by private investment funds affiliated with Silver Lake Group and GIC.
• The acquisition will result in Zuora becoming a private company, with the transaction expected to close in the first calendar quarter of 2025.
• Zuora stockholders will receive $10.00 in cash for each share of Zuora stock they own upon closing of the transaction.
• Unvested RSUs will be converted into a right to receive cash, with the payment vesting according to the original RSU schedule.
• The final ESPP purchase date is December 13, 2024, and shares purchased will be exchanged for $10.00 in cash at closing.
• Zuora will no longer publicly share quarterly earnings reports or hold earnings calls after the transaction closes.
• The company will continue to be led by Tien and remain headquartered in Redwood City.

Sentiment

Score: 7

Explanation: The document conveys a positive outlook regarding the acquisition, emphasizing continuity and long-term growth. While there are some negatives, such as the loss of public reporting, the overall tone is optimistic and reassuring.

Positives

• The acquisition provides a clear exit strategy for shareholders at $10 per share.
• Zuora will gain strategic flexibility as a private company to enhance its products and services.
• Silver Lake and GIC are experienced technology investors with a proven track record.
• The company will continue to be led by Tien, ensuring continuity in leadership.
• Zuora's core mission, strategy, values, and culture will remain unchanged.
• Employees will continue to receive internal updates about the company's performance.
• There are no anticipated changes to Zuora's sponsorship of employee visas or green cards.

Negatives

• Zuora will no longer be a publicly traded company, limiting public access to its financial information.
• The company will cease to hold quarterly earnings calls after the transaction closes.
• There is a potential for team and organization-level restructurings as the company evaluates its business.
• Stock options with an exercise price equal to or greater than $10.00 per share will be canceled for no consideration.
• The final FY25 bonus payment may be paid in cash for everyone depending on the timing of the transaction close.

Risks

• The transaction is subject to customary closing conditions and approvals, including stockholder and regulatory approvals, which could delay or prevent the deal from closing.
• There is a risk of potential litigation relating to the proposed transaction.
• Disruptions from the transaction could harm Zuora's business, including current plans and operations.
• The company may face challenges in retaining and hiring key personnel during the transition.
• There is a risk of adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction.
• The company's ability to pursue certain business opportunities or strategic transactions may be impacted during the pendency of the transaction.
• There is a risk that the transaction may be more expensive to complete than anticipated.

Future Outlook

The transaction is expected to close in the first calendar quarter of 2025, subject to customary closing conditions and approvals. Zuora will operate as a private company with a focus on long-term growth and customer needs.

Management Comments

• We'll continue to be transparent about how our business is performing, including key financial measures.
• Zuora remains committed to providing competitive compensation that is aligned with company performance.
• 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.
• 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 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

The acquisition reflects a trend of technology companies seeking private ownership to gain flexibility and focus on long-term growth. This move allows Zuora to operate outside the scrutiny of public markets and invest in strategic initiatives without the pressure of quarterly earnings.

Comparison to Industry Standards

• The acquisition of Zuora by private equity firms is similar to other recent deals in the tech sector, such as the acquisition of Qualtrics by Silver Lake and CPP Investments, which also involved taking a public company private.
• The $10 per share price represents a premium over the recent trading price of Zuora's stock, which is a common feature in acquisition deals.
• The move to private ownership is a strategy employed by companies seeking to avoid the short-term pressures of public markets and focus on long-term strategic goals, similar to Dell's move to go private in 2013.

Stakeholder Impact

• Shareholders will receive $10 per share in cash, providing a clear exit strategy.
• Employees will continue to be supported and will receive updates on the company's performance.
• Customers and partners should see no changes to the way they work with Zuora.
• The company will continue to operate under the same name and brand.

Next Steps

• Zuora stockholders will vote on the proposed transaction.
• The transaction will undergo regulatory review and approval.
• The company will continue to operate as a public company until the transaction closes.
• Details about tracking unvested cash payment rights will be shared closer to close.

Key Dates

Keywords

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