Billing software firm Zuora explores sale after takeover interest, sources say

Zuora

17/04/2024 18:32

(Adds more background, share movement in paragraph 5)
    By Milana Vinn
       NEW YORK, April 17 (Reuters) - Zuora, which makes
subscription management software for businesses, is exploring
options that include a sale after receiving acquisition interest
from potential suitors, according to people familiar with the
matter. 
    Redwood City, California-based Zuora  ZUO.N  has tapped
investment bank Qatalyst Partners to advise on discussions with
potential acquirers, which include private equity firms, the
sources said.
    Zuora's board has formed a special committee comprising
independent directors to handle the company's discussions on a
deal to allow for the possibility that its CEO and founder Tien
Tzuo and some other large shareholders may participate in the
transaction, one of the sources said. According to recent
company filings, Tzuo holds about 43% of Zuora's total voting
rights through a special class of shares.
    The sources cautioned that there is no certainty that any
deal will materialize and asked not to be identified because the
deliberations are confidential.
    Zuora's shares jumped more than 15% on the news, giving it a
market capitalization of about $1.5 billion. Zuora has lost more
than a third of its value since the company listed its shares on
the stock market, as it faced stiff competition from larger
players in the industry. 
    Zuora and Qatalyst did not immediately respond to requests
for comment. 
    Founded in 2007, Zuora offers billing software and other
subscription management tools to enterprise customers, which
include cloud computing firm Nutanix  NTNX.O  and Siemens
Healthineers. 
    In early 2022, Zuora raised $400 million through convertible
notes and warrants from buyout firm Silver Lake, which currently
holds a board seat at the company. Silver Lake is considering
whether it will bid for Zuora or be part of a potential deal
should there be a transaction, the sources said. 
    Silver Lake did not immediately respond to requests for
comment. 
    Earlier this year, Zuora said it planned to lay off about 8%
of its workforce as part of a broader company-wide cost-cutting
drive. 

 (Reporting by Milana Vinn in New York; additional reporting by
David French; Editing by Anirban Sen and Lisa Shumaker)
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