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The Penfield-based Paychex Inc. is acquiring Paycor HCM Inc. in a $4.1 billion deal between the two rivals specializing in enterprise benefits, human resources, and payroll solutions.
The all-cash transaction at $22.50 a share, expected to close in the first half of 2025, was approved unanimously Tuesday by the boards of both companies.
Paycor is a Cincinnati-based firm with about 2,900 employees and over 49,000 clients. It went public in 2021 and supports about 2.7 million employees across the U.S. with its products. Paychex, a giant in the sector, is a larger firm, paying one out of every 12 American private-sector employees through a customer base of more than 745,000.
John Gibson, Paychex president and CEO, says the milestone acquisition will be highly complementary. Paychex’s communications about the deal have particularly highlighted Paycor’s strengths serving larger enterprise clients, which Paychex executives envision harmonizing with their company’s expertise serving small and midsize businesses, according to an investor presentation about the transaction.
“It will enhance our capabilities upmarket, broaden our suite of AI-driven HR technology capabilities, and provide new channels for sustained long-term growth,” Gibson said in a statement. “Our customers will benefit from an expanded suite of technology and advisory solutions designed to help them address their HR challenges, and Paycor’s customers will benefit from our 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.”
The companies expect their combined offerings to be one of the most comprehensive human capital management portfolios in the industry, according to their announcement. The deal will push Paychex’s current total addressable market—the revenue opportunity available for the companies’ products if they were to achieve 100 percent market share—from at least $90 billion to over $100 billion, according to the investor presentation.
The acquisition comes after Paycor rounded out 2024 with strong financials, according to its quarterly Securities and Exchange Commission filing on Nov. 6. It projects total revenues of $726 million to $733 million, up 12 percent year-over-year at the top end of the range, by the end of its current fiscal year on June 30.
Another little wrinkle of the deal has already drawn public interest: Paycor has held the naming rights to the Cincinnati Bengals’ stadium since 2022, leading to speculation about whether the former Paul Brown Stadium will be due for another name change. Regardless, Paycor’s CEO, Raul Villar Jr., says the deal will create a great outcome for the company’s clients and key stakeholders.
“We are very excited to be joining Paychex for the next phase of our journey,” said Villar in a statement. “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.”
Paychex shares (Nasdaq: PAYX) midday were trading around $139, up 2.3 percent from yesterday’s close of $136.06. Rumors of the deal seeped out Sunday, after which Paychex shares jumped as much as 24 percent in premarket trading Monday.
Justin O’Connor is a Rochester Beacon contributing writer. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. See “Leave a Reply” below to discuss on this post. Comments of a general nature may be submitted to the Letters page by emailing [email protected].