REDWOOD CITY, Calif. - Zuora, Inc. (NYSE: NYSE:ZUO), a company specializing in monetization solutions for modern businesses, has announced a definitive agreement to be acquired by private equity firm Silver Lake and GIC Pte. Ltd., Singapore's sovereign wealth fund, in a deal valued at $1.7 billion. Following the close of the transaction, Zuora will transition from a public company to a private entity.
The acquisition terms stipulate that Silver Lake and GIC will purchase all outstanding shares of Zuora common stock at $10.00 per share in cash, which is an 18% premium over the company's unaffected closing stock price and a 20% premium on enterprise value. The Zuora Board of Directors, on the recommendation of a Special Committee of independent directors, has unanimously approved the agreement and recommended stockholder approval.
The Special Committee, led by Jason Pressman and including independent directors John D. Harkey, Jr., Laura Clayton McDonnell, and Tim Haley, conducted a comprehensive review of strategic alternatives. The committee engaged with over 30 parties and conducted due diligence with more than 10, ultimately concluding that the proposal from Silver Lake and GIC was the best available option for stockholders.
Tien Tzuo, Zuora’s Founder, CEO, and Chairman of the Board, expressed enthusiasm for the company's future as a private entity under Silver Lake and GIC's support. He will continue to lead Zuora and maintain a majority of his existing ownership in the company.
The transaction is expected to close in the first quarter of 2025, pending customary closing conditions and approvals, including regulatory approvals and the affirmative vote of Zuora’s stockholders. Zuora's common stock will be delisted from public stock exchanges upon completion of the deal.
Advisors for the transaction include Qatalyst Partners as the financial advisor to the Special Committee, Foros as financial advisor to Zuora, and legal counsel from Goodwin Procter LLP, Freshfields US LLP, Simpson Thacher & Bartlett LLP, Dechert LLP, and Sullivan & Cromwell LLP to various parties involved.
Zuora, headquartered in Redwood (NYSE:RWT) City, offers a suite of software solutions for businesses to manage and grow their revenue through dynamic pricing, billing, and subscription models. The company serves over 1,000 customers globally, including prominent names like General Motors (NYSE:GM) and The New York Times.
This article is based on a press release statement.
In other recent news, enterprise software company Zuora Inc . reported a 9% year-over-year increase in subscription revenue, totaling $104 million in the second quarter of fiscal year 2025. The company's non-GAAP operating income reached a record high of $25.6 million, surpassing expectations. In addition to these financial highlights, Zuora announced strategic acquisitions aimed at enhancing its AI capabilities.
The company's successful "land and expand" strategy led to notable customer expansion, as evidenced by collaborations with Zillow Group (NASDAQ:ZG) and Oura. However, the company also experienced a 10% decrease in professional services revenue, dropping to $11.3 million.
For the upcoming third quarter, Zuora projects subscription revenue to be between $104.5 million and $105.5 million. The full fiscal year subscription revenue is forecasted to range from $414.5 million to $416.5 million, with non-GAAP operating income expected to be between $90 million and $93 million. These recent developments reflect the company's commitment to balanced growth and improved profitability.
InvestingPro Insights
As Zuora (NYSE: ZUO) prepares to transition from a public to a private entity, InvestingPro data provides additional context to the acquisition deal. The company's market capitalization stands at $1.43 billion, slightly below the $1.7 billion valuation in the acquisition agreement, suggesting a favorable deal for shareholders.
InvestingPro Tips highlight that Zuora holds more cash than debt on its balance sheet, which could have been an attractive factor for the acquirers. Additionally, liquid assets exceeding short-term obligations indicate a strong financial position, potentially contributing to the company's appeal in the acquisition.
The acquisition price of $10.00 per share represents a premium over Zuora's recent trading price, which aligns with the InvestingPro data showing the stock's previous close at $9.42. This premium is particularly noteworthy given that Zuora's stock price movements have been quite volatile, as noted in another InvestingPro Tip.
While Zuora has not been profitable over the last twelve months, with a negative P/E ratio of -28.8, InvestingPro Tips suggest that analysts predict the company will be profitable this year. This expectation of future profitability may have played a role in Silver Lake and GIC's decision to take the company private.
For investors seeking more comprehensive insights, InvestingPro offers 10 additional tips for Zuora, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.