Paychex, Inc. (NASDAQ: PAYX) has announced its definitive agreement to acquire Paycor HCM, Inc. (NASDAQ: PYCR) in an all-cash transaction for $22.50 per share, representing an enterprise value of approximately $4.1 billion. This acquisition is expected to create one of the most comprehensive suites of human capital management (HCM) solutions in the industry.
Paycor, headquartered in Cincinnati, Ohio, serves over 49,000 clients and supports approximately 2.7 million employees across the United States. Since becoming a public company in 2021, Paycor has consistently invested in data, AI, and other cutting-edge technologies, expanding its upmarket position.
Following the acquisition, Paychex expects the transaction 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. The combined offering is anticipated to lead to expected run-rate cost synergies in excess of $80 million in the near term, with substantial revenue synergy opportunities over the next several years.
The transaction is expected to close in the first half of calendar 2025, subject to satisfaction of regulatory approvals and other customary closing conditions.
Paychex is being advised by J.P. Morgan Securities LLC as the exclusive financial advisor and Davis Polk & Wardwell, LLC as legal advisor. On the other hand, Goldman Sachs & Co. LLC is serving as the exclusive financial advisor to Paycor, with Kirkland & Ellis LLP as legal advisor.
After the acquisition, Paychex aims to better meet the needs of new and existing customers across all customer segments, complement its upmarket position, expand its sales coverage, and leverage strategic partnerships and embedded HCM capabilities. The company also plans to benefit from expected synergies and maintain its dividend policy and strong balance sheet.
Following the announcement, Paychex will hold a conference call on January 7, 2025, at 9:30 a.m. ET to review the details of the transaction.
As a result of this acquisition, Paychex will significantly enhance its capabilities upmarket, broaden its suite of AI-driven HR technology capabilities, and provide new channels for sustained long-term growth. Paycor's customers are expected to benefit from Paychex's broad product set of HR advisory and employee solutions and from the scale and tradition of operational and service excellence that Paychex is well-known for in the marketplace. As a result of these announcements, the company's shares have moved 0.1% on the market, and are now trading at a price of $22.19. For the full picture, make sure to review Paycor HCM's 8-K report.
