Ceridian Agrees to $5.3 Billion Buyout

Payroll processing company Ceridian Corp. has agreed to be purchased by private equity firm Thomas H. Lee Partners and Fidelity National Financial Inc., along with several other investors, for $5.3 billion. Ceridian shareholders will receive $36 per share in cash. The price represents a 5.3% premium to the shares' price prior to the announcement of the deal and a 17% premium to their price in February, just before the company began exploring strategic alternatives. Ceridian management has been at loggerheads with a major shareholder, William Ackman of the hedge fund Pershing Square Capital Management, who accused it of underperforming and demanded that the Comdata unit be spun off and the board replaced. Ceridian was also criticized by activist investment firm Relational Investors, which announced in April that it had sold off its entire holding. Ceridian provides payroll and benefits administration services to 110,000 companies in 38 countries as well as credit/debit card issuance. The company posted 2006 net income of $173.6 million ($1.20/share) on revenue of $1.57 billion. The deal is expected to close in Q4.

Sources: Wall Street Journal, Reuters, MoneyCentral
Commentary: Bigger Fish to Fry: Relational Investors Sells Remaining Stake in Ceridian • Ceridian: 14.5% Holder Pershing Square Files Suit • Activist Investors: Pay Enough and Ye Shall Be Heard
Stocks/ETFs to watch: Ceridian Corp. (CEN). Competitors: Automatic Data Processing, Inc. (ADP), First Data Corp. (FDC), Paychex Inc. (PAYX)

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