Analysts say a buyout would provide Dayforce some relief from its debt load and help the company accelerate AI development and expand internationally.Timon Schneider / SOPA Images/Reuters
HR software provider Dayforce DAY-T said on Thursday buyout firm Thoma Bravo will take it private in a $12.3 billion deal, including debt.
The offer represents a premium of 32.4% based on the stock’s closing price on August 15, when news of the deal talks was first reported.
Under the terms of the deal, Dayforce shareholders will receive $70 per share in cash, representing an equity value of $11.18 billion, according to Reuters calculations. The company is based in Minneapolis but largely managed out of Canada and led by Toronto-based CEO and chairman David Ossip.
The software sector has emerged as an investment target due to resilient subscription services and recurring revenue in an economy weighed down by a deteriorating labour market, trade tariffs and erratic spending.
Dayforce faces strong competition in the industry, with enterprises preferring more established companies with larger operations.
Dayforce, led by Toronto’s David Ossip, confirms privatization talks with Thoma Bravo
A wave of deals in the human capital management industry in recent years signals a shift toward AI-driven, single-platform solutions, with acquisitions aimed at consolidating and enhancing the tools offered to clients.
Paychex announced its acquisition of rival Paycor for $4.1-billion at the start of the year, while Automatic Data Processing acquired WorkForce Software last year for about $1.2-billion.
The transaction, which includes a minority investment from a subsidiary of the Abu Dhabi Investment Authority, is expected to close early next year, Dayforce said.
Dayforce sells payroll and other human-resources services, including benefits and work force and talent management administration, on a single online subscription-based platform, which has nearly 7,000 customers.
“Dayforce has always stood for a bold promise: to make work life better,” Mr. Ossip said in a LinkedIn post about the deal. “As one of the world’s leading enterprise software investors, Thoma Bravo’s commitment amplifies this promise as we partner to grow our business, increase quantifiable value for customers, and further secure our position in AI as a generational software company.”
The deal represents a return to private ownership for the former Ceridian, which was a faded technology stalwart (it started life as an IBM unit in 1932) that was purchased by U.S. private-equity giant Thomas H. Lee Partners in 2007.
In 2012 the payment processing company bought Dayforce, then a startup led by Mr. Ossip that had built an online human resources management platform in Toronto. Part of the deal was that Mr. Ossip would become CEO of Ceridian and lead its transformation into a 21st century subscription software powerhouse. The digital side of its business grew rapidly and the company went public as Ceridian HCM Holdings Inc. in 2018, changing its name last year.
Its stock shot up from an issue price of US$22 a share to more than US$130 in fall 2021 before tech stocks began to sell off dramatically on fears, later realized, of interest rate hikes. Most haven’t recovered, with Dayforce only trading in the low US$50s range before Bloomberg broke the news about the imminent buyout last weekend.
Analysts have said a buyout would provide Dayforce some relief from its debt load, while Thoma Bravo’s deep pockets would help the company accelerate AI development and expand internationally.
Thoma Bravo, which had about $184-billion in assets under management as of March 31, is among the largest software-focused investors globally. The private equity firm has acquired or invested in more than 530 software and technology companies.
- with files from Sean Silcoff