$11 billion investor buyout agreed for Ultimate Software

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  • Sector’s first big deal in years
  • Buyout at 19% premium
  • Deal to close in mid-2019

An investor group led by private equity firm Hellman & Friedman has reached an agreement to buy out Ultimate Software Group Inc for around $11 billion.

On Monday, the cloud-based human resources applications developer made the announcement, which will see an all-cash offer of $331.50 per share. This is at a 19% premium to the company’s closing price on Friday.

Ultimate Software shares saw a steep rise to $332.01 in premarket trading yesterday, which was 19.5% up on Friday’s close.

In addition to Hellman & Friedman, the group behind the buyout includes Blackstone Group LP, JMI Equity, GIC Pte Ltd, and Canada Pension Plan Investment Board.

The size of the industry in which Ultimate Software operates is expected to be worth around $22.17 billion in 2023, according to findings from Allied Market Research. The cloud human capital management sector features other big players such as Workday Inc, Automatic Data Processing Inc, and Oracle Corp.

The niche sector has not seen such a significant deal since 2011, when SAP SE, Europe’s top technology company, acquired SuccessFactors in a deal worth $3.4 billion.

However, the partners in this latest deal have been active in human resources management software takeovers before, with Hellman & Friedman having taken Kronos Inc private in 2007 at a cost of $1.8 billion and Blackstone already owning Alight Solutions LLC, a benefits and HR platform.

The deal is slated to close in mid-2019, according to Ultimate Software’s announcement. When it is completed, the then-privately-held company will be managed by the existing management team headed by Chief Executive Officer Scott Scherr.

Ultimate Software generated in excess of $1.1 billion in revenue last year. The firm was represented by Goldman Sachs & Co LLC, who acted as financial adviser to the company in the buyout.

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam