On February 4, an investment group led by Hellman & Friedman confirmed that it had agreed to purchase cloud-based HR developer Ultimate Software in an $11bn deal. The group, which also includes Blackstone, CPPIB, GIC and JMI Equity, has committed to a cash transaction that values Ultimate Software at $331.50 per share.
Reuters reported that the agreement will be heavily financed with equity and will use a moderately small quantity of debt compared with typical leveraged buyouts. Ultimate Software, which generated over $1.1bn in revenue last year, expects the deal to close in mid-2019.
Speculation of a rival bid, which could now be accepted during a 50-day shopping period, saw the company’s shares surge by 19.5 percent
Speculation of a rival bid, which could now be accepted during a 50-day shopping period, saw the company’s shares surge by 19.5 percent.
Ultimate Software CEO Scott Scherr said, “Our customers will benefit from our ability to bring new features and services to market more quickly. Hellman & Friedman is in full alignment with our vision to serve the global HR market, while preserving our unique company culture and mission.”
Scherr and his senior management team will stay in their positions following the acquisition.
Florida-based Ultimate Software was founded in 1990 and is the second-fastest growing provider in its sector. The company’s customers include Subway and Red Roof Inn. It offers packages to manage payroll and benefits, as well as subscription-based analytics tools that track a full range of HR solutions.
Hellman & Friedman makes regular market ventures in the communications, technology, health care and industrial sectors. The private equity fund already owns another HR software firm, Massachusetts-based Kronos, suggesting that it views workforce management as a potentially lucrative market.
The cloud computing sector looks set for continued growth. The technology has applications far beyond HR and has been embraced by numerous business seeking flexibility, efficiency and scalability benefits.