Paychex, Inc. today announced it has entered into a definitive agreement to acquire Paycor HCM, Inc., a leading provider of human capital management, payroll and talent software in an all-cash transaction for $22.50 per share, representing an enterprise value of approximately $4.1 billion.
The definitive agreement has been unanimously approved by the Boards of Directors of both companies. As a result of the deal, Paychex customers are expected to benefit from an expanded suite of technology and advisory solutions while Paycor’s customers will benefit from the broad product set of HR advisory and employee solutions from Paychex and from the scale and tradition of operational and service excellence.
Headquartered in Cincinnati, Paycor has approximately 2,900 employees, serves over 49,000 clients, and supports approximately 2.7 million employees across the U.S. Paycor’s leading HCM, payroll, and talent platform was designed to serve organizations of all sizes, from ten to thousands of employees. Paycor has expanded its upmarket position since becoming a public company in 2021 by consistently investing in data, AI, and other cutting-edge technologies.
“I’m excited to welcome Paycor to the Paychex family,” said John Gibson, President and CEO of Paychex. “For over 50 years, Paychex has been committed to helping businesses succeed. This acquisition represents a significant milestone in our journey to provide best-in-class HCM solutions to businesses of all sizes.”
Gibson added that the acquisition of Paycor is highly complementary. “It will enhance our capabilities upmarket, broaden our suite of AI-driven HR technology capabilities, and provide new channels for sustained long-term growth,” he said.
Integrating Paycor’s clients will allow Paychex to broaden its reach and offer retirement solutions to a larger audience. Paychex’s existing retirement services, including 401(k) plans and Pooled Employer Plans (PEPs), can now be extended to Paycor’s clientele, providing them with more retirement planning choices.
“Paycor’s mission is to empower business leaders to achieve greater success,” said Raul Villar, Jr., CEO of Paycor. “We believe this transaction will create a great outcome for our clients and key stakeholders, and we are very excited to be joining Paychex for the next phase of our journey. We are confident that our customers will benefit from the shared expertise, resources, and innovative HCM solutions of both companies to drive even greater people and business performance.”
Transaction overview
According to a press release announcing the deal, the combined offering will create one of the most comprehensive HCM portfolios in the industry, allowing Paychex to better meet the needs of new and existing customers across all customer segments. The release went on to add:
- Paycor’s strength upmarket will complement Paychex’s position in this customer segment
- Acquisition significantly expands Paychex’s sales coverage and adds additional growth platforms via access to Paycor’s strategic partnerships and embedded HCM capabilities
- Shared emphasis on helping businesses succeed through leading technology and advisory solutions and commitment to investing in product innovation and using data and AI to provide actionable insights to customers
- Expected run-rate cost synergies in excess of $80 million in the near-term and substantial revenue synergy opportunity over the next several years
- Expected to be neutral to slightly accretive to adjusted diluted EPS in the first fiscal year post-close and accretive in the second fiscal year and beyond
Transaction details
- All-cash acquisition of 100% of Paycor for $22.50 per share, reflecting approximately $4.1 billion enterprise value
- Represents a premium of approximately 19% over Paycor’s 30-day volume weighted average trading price as of the unaffected trading date of January 3, 2025
- Paychex has obtained committed financing to support the transaction, which is expected to be funded with incremental debt
- Acquisition is expected to close in the first half of calendar 2025, subject to satisfaction of regulatory approvals and other customary closing conditions
- Pride Aggregator, LP, an affiliate of Apax Partners LLP, currently owns 96.1 million of Paycor’s shares, representing a majority of Paycor’s outstanding common stock. Pride Aggregator, LP has approved the transaction by written consent
J.P. Morgan Securities LLC is serving as the exclusive financial advisor to Paychex, and Davis Polk & Wardwell, LLC is serving as legal advisor to Paychex. Goldman Sachs & Co. LLC is serving as the exclusive financial advisor to Paycor, and Kirkland & Ellis LLP is serving as legal advisor to Paycor.
SEE ALSO:
• Corporate Roundup: Paychex Exceeds 120,000 Clients