Two investment firms buy Ceridian for $5.3 billion
Bloomington-based Ceridian Corp. is being acquired by an investor firm and an insurance company for $5.3 billion.
The payroll processing company has its roots in the former Control Data. The mainframe computer maker played a key role in making Minnesota a leading center for high-powered computing.
Ceridian has been in a fight with a major shareholder, and Wednesday agreed to a buyout offer from Thomas H. Lee Partners and Fidelity National Financial.
Ceridian employs about 1,000 people in Minnesota and more than 9,000 worldwide.
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"We believe these firms bring complementary skills which will help us build upon our leadership position as we continue to implement our strategic plan," said Kathryn V. Marinello, president and chief executive of Ceridian, in a statement.
A company spokesperson said the company's headquarters will remain in Minnesota, and no job cuts or layoffs are planned.
Ceridian is one of the largest human resource companies in the U.S., processing payroll, tax information and benefits for 25 million employees and more than 100,000 companies worldwide.
The Comdata division of the company issues private label credit cards used in the trucking industry, and retailer gift cards.
Comdata was at the heart of a battle with Ceridian's biggest shareholder, Pershing Square Capital Management. The hedge fund was pushing Ceridian to spin off Comdata, which has performed better than the slower-growing payroll processing business.
The fight cost the head of Comdata his job. Ceridian accused him of sharing confidential information with Pershing Square officials, though the hedge fund disputed that.
Thomas H. Lee Partners is a buyout firm that manages about $20 billion. Fidelity National Financial is one of the nation's largest insurance providers. It also owns another business similar to Ceridian.
Fidelity National Chairman and Chief Executive William P. Foley II cited Ceridian's position in large, growing markets and its strong cash flow, among other factors, in explaining Fidelity's interest in the company.
"We are very excited about our investment in Ceridian," he said.
The two buyers say they expect to bring other partners into the deal.
Ceridian traces its employer services business back to a company founded in the 1930s. Control Data acquired that business from archrival IBM as part of an antitrust settlement.
Control Data suffered dramatic losses in the 1980s with the declining popularity of mainframe computers. Ceridian came into being after Control Data split in two in 1992.
Shares of Ceridian rose 47 cents to $34.19 in regular trading Wednesday. In aftermarket activity, they added another $1.41, or 4.1 percent, to $35.60. The stock has ranged from $21.76 to $35.35 over the past year.
(The Associated Press contributed to this report)