Silver Lake’s $1.7 Billion Zuora Deal Hit With Court Challenge

Zuora Inc. insiders orchestrated a self-dealing $1.7 billion sale to Silver Lake after undercutting an activist investor, according to a court filing challenging the transaction.

The motion by a Zuora shareholder seeks to block the deal—announced Oct. 17—and fast-track his February lawsuit over the software company’s advance-notice director nomination bylaw. Founder Tien Tzuo and his allies wielded the restrictive provisions to “shut down” a bid for board seats by activist firm Scalar Gauge Fund LP that could have pressured Tzuo into a fairer transaction, according to the Oct. 25 filing in Delaware’s Chancery Court.

Silver Lake, which isn’t a party ...