What will Paycor shareholders receive for their shares?

Each share of Paycor common stock outstanding at the effective time (other than certain excluded shares and shares subject to appraisal rights) will be converted into the right to receive $22.50 in cash, without interest.

How will Paycor's equity awards be treated?

Stock options will be cashed out at the spread over the exercise price. Director RSUs and certain other RSUs, including those held by employees below the 'Director' level and cash-settled RSUs held by Serbia-based employees, will be converted into cash, with the latter subject to restrictions. Other RSUs, PSUs and restricted stock awards will be exchanged for Paychex stock awards using a conversion ratio based on the $22.50 consideration divided by Paycor's 30-day VWAP before the effective time.

Is further stockholder approval needed?

No. Pride Aggregator, LP, Paycor's majority stockholder, delivered a written consent approving the merger. The filing states that no further action by Paycor stockholders is required, although an information statement on Schedule 14C must be mailed to stockholders at least 20 days before closing.

How will the acquisition be financed?

The press release states the transaction is expected to be funded with incremental debt, and Paychex has obtained committed financing. The 8-K describes a commitment from JPMorgan Chase Bank, N.A. for a 364-day unsecured bridge term loan facility of up to $3.5 billion, reduced by net proceeds from certain debt, equity or asset dispositions before closing.

What conditions must be met before the deal closes, and when could it end?

Closing requires stockholder approval (already obtained by written consent), no legal prohibition, and expiration or termination of the HSR waiting period, along with accuracy of representations, compliance with covenants and, for Paychex, absence of a material adverse effect and certain money transmission and insurance law approvals. Closing may not occur before April 15, 2025 unless Paychex waives this date, and either party may terminate if the merger is not completed by October 7, 2025.

PAYX 8-K: Material Agreements & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed January 7, 2025. Cited figures are marked; the original filing is the authoritative source.

On January 7, 2025, Paychex, Inc. entered into an Agreement and Plan of Merger with Skyline Merger Sub, Inc. and Paycor HCM, Inc. under which Paycor will become an indirect wholly owned subsidiary of Paychex.

Paycor common stock will be converted into the right to receive $22.50^a per share in cash, which the company's press release states represents an enterprise value of approximately $4.1 billion. Paycor's majority stockholder, Pride Aggregator, LP, has already delivered a written consent approving the merger, so no further stockholder action is required, though an information statement on Schedule 14C must be mailed at least 20 days before closing. Paychex has obtained a commitment from JPMorgan Chase Bank, N.A. for a 364-day unsecured bridge term loan facility of up to $3.5 billion, which will be reduced by net proceeds from certain debt, equity or asset dispositions before closing.

Closing is subject to customary conditions, including expiration of the Hart-Scott-Rodino waiting period and, for Paychex, certain approvals under money transmission and insurance laws. The Closing may not occur before April 15, 2025 unless Paychex waives that date, and either party may terminate if the merger is not consummated by October 7, 2025.

The press release states the transaction is expected to be neutral to slightly accretive to adjusted diluted EPS in the first fiscal year after close and accretive in the second year and beyond, with expected run-rate cost synergies in excess of $80 million^b. Paychex also states it is committed to maintaining its dividend policy and balance sheet, and expects the deal to close in the first half of calendar 2025.

02—Key points

Key Highlights

All-cash acquisition of Paycor HCM, Inc. at $22.50 per share, representing an enterprise value of approximately $4.1 billion
Premium of approximately 19% over Paycor's 30-day volume weighted average trading price as of January 3, 2025
Majority stockholder Pride Aggregator, LP, which holds 96.1 million Paycor shares, delivered a written consent approving the merger, so no further Paycor stockholder vote is required
Paychex obtained a commitment from JPMorgan Chase Bank, N.A. for a 364-day unsecured bridge term loan of up to $3.5 billion
Expected run-rate cost synergies in excess of $80 million in the near term, plus revenue synergy opportunities over several years
Expected to be neutral to slightly accretive to adjusted diluted EPS in the first fiscal year post-close and accretive thereafter
Closing is subject to HSR antitrust clearance and other conditions, may not occur before April 15, 2025 without waiver, and either party may terminate if not consummated by October 7, 2025

03—Questions

Frequently Asked Questions

What will Paycor shareholders receive for their shares?
Each share of Paycor common stock outstanding at the effective time (other than certain excluded shares and shares subject to appraisal rights) will be converted into the right to receive $22.50 in cash, without interest.
How will Paycor's equity awards be treated?
Stock options will be cashed out at the spread over the exercise price. Director RSUs and certain other RSUs, including those held by employees below the 'Director' level and cash-settled RSUs held by Serbia-based employees, will be converted into cash, with the latter subject to restrictions. Other RSUs, PSUs and restricted stock awards will be exchanged for Paychex stock awards using a conversion ratio based on the $22.50 consideration divided by Paycor's 30-day VWAP before the effective time.
Is further stockholder approval needed?
No. Pride Aggregator, LP, Paycor's majority stockholder, delivered a written consent approving the merger. The filing states that no further action by Paycor stockholders is required, although an information statement on Schedule 14C must be mailed to stockholders at least 20 days before closing.
How will the acquisition be financed?
The press release states the transaction is expected to be funded with incremental debt, and Paychex has obtained committed financing. The 8-K describes a commitment from JPMorgan Chase Bank, N.A. for a 364-day unsecured bridge term loan facility of up to $3.5 billion, reduced by net proceeds from certain debt, equity or asset dispositions before closing.
What conditions must be met before the deal closes, and when could it end?
Closing requires stockholder approval (already obtained by written consent), no legal prohibition, and expiration or termination of the HSR waiting period, along with accuracy of representations, compliance with covenants and, for Paychex, absence of a material adverse effect and certain money transmission and insurance law approvals. Closing may not occur before April 15, 2025 unless Paychex waives this date, and either party may terminate if the merger is not completed by October 7, 2025.

04—Continue

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