Two investors have put a $5.3 billion price tag on payroll and HRO provider Ceridian Corporation of Minneapolis. Thomas H. Lee Partners, L.P. (THL Partners) and Fidelity National Financial, Inc. said they have reached a definitive merger agreement to make the acquisition in an all-cash transaction. The deal is expected to close in the fourth quarter of this year.
Under the terms of the agreement, Ceridian shareholders will receive $36 a share—a premium of approximately 17 percent over Ceridian’s closing share price on February 12 (the last trading day prior to the public announcement that Ceridian had commenced the exploration of strategic alternatives) and a premium of approximately 56 percent over Ceridian’s closing share price on October 6, 2006, the last trading day prior to the announcement of Kathryn V. Marinello ’s appointment as president and CEO of Ceridian.
Ceridian provides HR, transportation, and retail information management services, serving businesses and employees in the U.S., Canada, and Europe. It operates through two principal divisions, Human Resource Solutions (HRS) and Comdata. HRS offers a broad range of human resource outsourcing solutions, including payroll processing, tax filing, benefits administration, work-life and employee advisory programs, and other HR-related services. The division serves 25 million employees and 110,000 companies in 38 countries worldwide, including a majority of the Fortune 500.
“The primary goal of the review of strategic alternatives that we announced on February 13, 2007, was to maximize value for our shareholders,” said L. White Matthews, III , chairman of Ceridian. “The board, along with its financial and legal advisors, evaluated a broad range of alternatives and concluded that the sale of Ceridian to THL Partners and FNF represents the best and most certain way to achieve that goal.”
THL Partners is one of the oldest private equity investment firms in the U.S. Since its founding in 1974, THL Partners has invested approximately $12 billion of equity capital in more than 100 businesses with an aggregate purchase price of more than $100 billion. It has completed more than 200 add-on acquisitions for portfolio companies. The firm currently manages approximately $20 billion of committed capital. Notable transactions sponsored by the firm include Univision , The Nielsen Company , West Corporation , Fidelity National Information Services , Sedgwick CMS , Dunkin Brands , Fisher Scientific , Experian , Snapple Beverage , and ProSiebenSat1 Media .
Fidelity National Financial, ranked No. 264 on the Fortune 500, is a provider of title insurance, specialty insurance and claims management services. It runs three primary businesses: Fidelity National Title Group, Inc. and Fidelity National Property and Casualty Insurance Group.
“We are proud to partner with THL Partners, a leading investment firm with a proven track record of success in acquiring and building companies, and FNF, one of the nation’s leading providers of title insurance, specialty insurance, and claims management services to large corporate and public sector entities,” said Marinello. “We believe these firms bring complementary skills that will help us build upon our leadership position as we continue to implement our strategic plan. Our customers will benefit from a company focused on offering repeatable, reliable service at unmatched industry levels.”
“We are very excited about our investment in Ceridian," said FNF chairman and CEO William P. Foley, II. “Ceridian has leading market positions in large, growing markets, long-term and diversified customer relationships, recurring and predictable revenue, strong cash flow, and a significant margin expansion opportunity. We have a solid track record of managing business transformation and achieving significant cost synergies in past acquisitions. Ceridian has a profile similar to that of Alltel Information Services, which we acquired in 2003 and used as the cornerstone in building what is now Fidelity National Information Services, a nearly $10 billion market cap company. We look forward to the Ceridian acquisition and the opportunity it provides for us to continue to create significant long-term value for FNF shareholders.”
THL Partners and FNF expect to bring co-investors into the transaction. FNF will own less than 50% of Ceridian at closing and will treat the Ceridian investment under the equity method of accounting for financial statement purposes, similar to a minority ownership stake in Sedgwick CMS, and will not consolidate the financial results of Ceridian.
The transaction is subject to certain closing conditions, including the approval of Ceridian’s shareholders, antitrust and state regulatory approvals, and the satisfaction of other customary closing conditions. There is no financing condition to consummate the transaction. The transaction is expected to close following the satisfaction of all closing conditions and completion of a financing marketing period, which is anticipated to occur in the fourth quarter.
