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

By Milana Vinn

NEW YORK (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 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 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)