Paychex (PAYX) announced on Tuesday that it will acquire Paycor HCM (PYCR) in an all-cash deal worth $4.1 billion. The deal values Paycor at $22.50 per share and marks a premium of 19% over its 30-day volume-weighted average trading price as of January 3. Paychex is a provider of human capital management (HCM) software.
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The acquisition is expected to close in the first half of this year, subject to regulatory approvals and customary closing conditions.
Paychex’s Strategic Rationale Behind the Acquisition
Following the close of the deal, the combined entity will offer one of the most comprehensive HCM solution suites in the industry, catering to organizations of all sizes. This deal is also likely to extend Paychex’s upmarket position by expanding its portfolio of AI-driven HR technology and advisory services.
PAYX’s Expects the Acquisition to Be Accretive
Paychex projects the acquisition to be neutral to slightly accretive to adjusted diluted earnings per share (EPS) in the first Fiscal year following the close of the deal and accretive in the second FIscal year and beyond. By integrating Paycor’s talent software and payroll expertise, Paychex aims to enhance its offerings in HR management, employee benefits, insurance, and payroll solutions.
Is Paychex a Good Stock to Buy?
Analysts remain sidelined about PAYX stock, with a Hold consensus rating based on 10 Holds and two Sells. Over the past year, PAYX has increased by more than 20%, and the average PAYX price target of $138.17 implies a downside potential of 1.2% from current levels.
