DEFA14A: Zuora to be Acquired by Silver Lake and GIC in $10 Per Share Going-Private Transaction

Zuora, Inc. will be acquired by private investment funds affiliated with 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 Zodiac Purchaser, L.L.C., which is indirectly controlled by private investment funds affiliated with Silver Lake Group, L.L.C. and GIC.
• The transaction involves a merger where Zodiac Acquisition Sub, Inc., a wholly-owned subsidiary of Zodiac Purchaser, will merge with Zuora, with Zuora continuing as the surviving corporation.
• The agreed purchase price is $10 per share in cash.
• A special meeting of stockholders is scheduled for February 13, 2025, to vote on the merger agreement and related proposals.
• The Zuora Board unanimously recommends that stockholders vote in favor of the merger agreement.
• The transaction is expected to close in the first calendar quarter of 2025, subject to customary closing conditions and approvals.
• Following the closing, Zuora will become a private company and will no longer be listed on the New York Stock Exchange (NYSE).
• Zuora will continue to be headquartered in Redwood City and led by Tien Tzuo after the transaction closes.
• Silver Lake has been an investor in Zuora since 2022.
• Employees will receive $10 per share for Zuora stock they own upon closing of the transaction.
• Unvested equity awards will be converted into cash payment rights based on a price of $10 per share, vesting according to the original schedule.
• The final ESPP purchase date will be December 13, 2024, and any shares purchased will be exchanged for $10 per share at closing.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The document conveys confidence in the transaction and its benefits for Zuora's future, employees, and customers. The emphasis on continuity and the support of experienced investors like Silver Lake and GIC contribute to the positive outlook.

Positives

• Stockholders will receive $10 per share in cash, providing immediate liquidity.
• Employees' unvested equity awards will be converted into cash payment rights, ensuring continued vesting benefits.
• Zuora will continue to operate under the same name and brand, with its headquarters remaining in Redwood City.
• The current management team, including CEO Tien Tzuo, will continue to lead the company.
• Silver Lake and GIC's investment is expected to provide Zuora with additional strategic flexibility and resources.
• Employees on F-1, H-1B, L-1, or TN visas will continue to be sponsored by Zuora.

Negatives

• Zuora will no longer be a publicly traded company, which may reduce transparency for some stakeholders.
• Employees will no longer have the opportunity to participate in the ESPP after December 13, 2024.
• There will be a $38 reorganization fee charged by E*Trade to all account holders of shares exchanged in the going private transaction.
• Details of any changes to the compensation structure will be shared once the transaction has closed.

Risks

• The transaction is subject to customary closing conditions and approvals, including regulatory approvals and approval by Zuora stockholders, which may cause delays or prevent the transaction from closing.
• Potential litigation relating to the proposed transaction could delay or prevent the transaction from closing.
• Disruptions from the proposed transaction could harm Zuora's business, including current plans and operations.
• The company's ability to retain and hire key personnel could be impacted by the transaction.
• Changes to incentive strategies for employees post-close are still being determined.

Future Outlook

The transaction is expected to close in the first calendar quarter of 2025, after which Zuora will operate as a private company with the support of Silver Lake and GIC.

Management Comments

• Zuora's success is built on always being one step ahead.
• We operate in a dynamic and sometimes challenging environment, and as a private company, we will be better positioned to enhance the products and services we provide to our customers.
• 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, where all ZEOs are empowered to own our outcomes, make unique contributions and thrive.

Industry Context

The going-private transaction reflects a trend of technology companies seeking greater flexibility and long-term investment horizons by operating outside the scrutiny of public markets.

Comparison to Industry Standards

• Silver Lake has a history of taking technology companies private, including Dell, Blackhawk, and SolarWinds.
• The $10 per share offer represents a premium over Zuora's recent trading price, which is a common practice in acquisition deals.
• Similar to Qualtrics, Zuora will benefit from the strategic and operational expertise of its private equity owners.

Stakeholder Impact

• Stockholders will receive $10 per share in cash.
• Employees will have their unvested equity awards converted into cash payment rights.
• Customers should see no changes to the way they work with Zuora.
• The company expects to continue enhancing its capabilities and building out its monetization suite.

Next Steps

• Zuora stockholders will vote on the proposed transaction at a special meeting on February 13, 2025.
• The company will continue to operate as a public company until the transaction closes, expected in the first calendar quarter of 2025.
• Zuora will work with Silver Lake and GIC to determine appropriate incentive strategies for employees post-close.
• Details about tracking unvested cash payment rights that the unvested RSUs will convert into at close will be shared closer to close.

Key Dates

Keywords

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