Paychex completes Paycor acquisition for $4.1 billion

ROCHESTER, N.Y. - Paychex, Inc. (NASDAQ:PAYX), a leading human capital management (HCM) company, announced today the completion of its acquisition of Paycor HCM, Inc. (NASDAQ:PYCR), a prominent HCM, payroll, and talent software provider. The all-cash transaction valued Paycor at $22.50 per share, totaling approximately $4.1 billion in enterprise value. According to InvestingPro data, Paychex enters this acquisition from a position of financial strength, with a "GREAT" financial health score and holding more cash than debt on its balance sheet. The company has demonstrated impressive gross profit margins of 72% in the last twelve months.

John Gibson, Paychex president and CEO, stated that the acquisition unites two industry leaders, enhancing the company’s AI-enabled technology and service capabilities. The merger is expected to provide a comprehensive HCM solution portfolio, positioning Paychex to better serve customers across various market segments.

Gibson also mentioned that the integration aims to expedite sales growth and product innovation, contributing to Paychex’s upmarket competitive position and unlocking new revenue streams. The company anticipates over $80 million in annual cost synergies by fiscal 2026, with additional revenue synergies projected in the coming years. The acquisition is expected to be accretive to Paychex’s adjusted diluted earnings per share (EPS) in fiscal 2026.

The combined entity is set to offer a broad range of HCM solutions, serving nearly 800,000 customers in the U.S. and Europe. Paychex remains committed to maintaining its dividend policy and a strong balance sheet post-acquisition. Based on InvestingPro analysis, the stock currently appears to be trading above its Fair Value, with high earnings and EBITDA multiples. For detailed insights into Paychex’s valuation and 12+ additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.

J.P. Morgan Securities LLC acted as the exclusive financial advisor to Paychex, while Davis Polk & Wardwell LLP provided legal advice. Paycor’s financial advisory was managed by Goldman Sachs & Co. LLC, with Kirkland & Ellis LLP as legal counsel.

The transaction is subject to customary closing conditions and regulatory approvals. This acquisition is a strategic step for Paychex in enhancing its product offerings and market reach, as well as delivering increased value to stakeholders.

The information provided in this article is based on a press release statement. Forward-looking statements included in the press release are subject to various risks and uncertainties, and actual results may differ materially from those projected.

In other recent news, Paychex, Inc. has successfully completed a $4.2 billion offering of senior notes, as detailed in a recent SEC filing. The notes, divided into three tranches with varying interest rates and maturities, are expected to support the acquisition of Paycor HCM, Inc. and other corporate purposes. This strategic move reflects Paychex’s efforts to secure long-term financing and indicates investor confidence in the company’s financial stability. Additionally, RBC Capital Markets maintained its Sector Perform rating for Paychex, with a steady price target of $148, highlighting stable demand and improved margins. Paychex’s earnings per share exceeded expectations, driven by strong performance in the Management Solutions segment. Meanwhile, TD Cowen has kept a Hold rating on Paychex, affirming a $147 price target, despite some downward revisions in certain service areas. Analysts from both firms acknowledge the company’s adept management of controllable factors amidst economic uncertainties. The impending completion of the Paycor acquisition is expected to influence Paychex’s financial results by fiscal year 2026.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.