M&A

Hedge-Fund Deal Paves Way for Ceridian Buyout

Pershing Square, which gets nominees on the payroll-services firm's board, drops objection to deal with T.H. Lee and Fidelity National.
Roy HarrisSeptember 10, 2007

Ceridian Corp. reached agreement with a shareholder, hedge fund Pershing Square Capital Management LP, ending a proxy battle and allowing the payroll services company to proceed with its buyout deal.

Ceridian said it would increase its board to 11 members by appointing three Pershing Square nominees: John D. Barfitt, Robert J. Levenson, and Gregory A. Pratt, to join Pershing Square’s Paul C. Hilal on the Ceridian board.

Ceridian president and CEO Kathryn V. Marinello said in a joint statement with Pershing Square that the deal allows Ceridian “to move forward decisively” to complete its buyout by affiliates of Thomas H. Lee Partners LP and Fidelity National Financial Inc. The deal has been valued at $3.99 billion.

William Ackman, the shareholder activist who controls Pershing Square, had called the buyout offer insufficient, but last month had dropped his opposition, saying tighter credit markets mean the offer is probably the best Ceridian can do, according to the Associated Press.

The settlement was a sudden reversal for Ceridian, which on Friday had said that electing any of Pershing’s nominees could be “disruptive,” as well as a threat to the closing of the deal. On Monday, according to AP, Ackman, said the shareholders anticipate a “prompt closing.” He owns nearly 15 percent of Ceridian.

Even before the buyout plans were announced, Pershing Square had strong disagreements with Ceridian. In March Ackman protested against the departure of its CFO, Douglas C. Neve. Then in May, Ceridian fired an executive of one of its units, saying he had passed information to Pershing Square.