Ceridian to raise US $562M from IPO on NYSE/TSX and private placement – updated

Ceridian HCM Holding Inc. (NYSE/TSX: CDAY) has filed a final prospectus in connection with its proposed initial public offering (IPO). The company intends to issue 21 million shares of common stock at an offering price between US $19.00 and $21.00 per share for gross proceeds of up to US $441 million (all figures in US dollars) (updated – Ceridian priced its IPO at $22 per share on April 26, 2018 for gross proceeds of $462 million)

Dragoneer Investment Group, LLC has indicated an interest in purchasing an aggregate of up to $75.0 million in shares in this offering at the initial public offering price.

THL / Cannae Investors LLC, one of existing stockholders controlled by Thomas H. Lee Partners, L.P. and Cannae Holdings, Inc. (NYSE: CNNE), has agreed to purchase $100 million shares of common stock in a con-current private placement at a price per share equal to the initial public offering price.

Assuming $20 (mid-point) offering price and assuming full exercise of over-allotment option, Ceridian will have 138,052,769 shares issued and outstanding, and 150,719,980 shares on fully-diluted basis which translates to a valuation of $3.01 billion. (updated – Ceridian will have approximately 150,265,434 shares on fully diluted basis for a valuation of $3.3 billion)

Upon closing of the IPO and con-current private placement, Thomas H. Lee Partners and Cannae will continue to own 52.5% and 33.1% respectively of the issued outstanding shares or 51.3% and 27.3% assuming full exercise of over-allotment option.

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC act as lead underwriters for the offering. Goodmans LLP, and Weil, Gotshal & Manges LLP act as Canadian and US legal counsels to Ceridian. Osler, Hoskin & Harcourt LLP and Latham & Watkins LLP act as legal counsels to the underwriters.

Ceridian’s shares are expected to begin trading on the New York Stock Exchange and on an “if, as and when issued” basis on the TSX on April 26, 2018 under the ticker symbol “CDAY.”

Minneapolis, Minnesota based Ceridian is a global HCM software company. Dayforce, its flagship cloud HCM platform, provides HR, payroll, benefits, workforce management, and talent management functionality. Ceridian Canada is headquartered in Winnipeg, Manitoba with its operating headquarters based in Markham and Toronto.

Thomas H. Lee Partners and Cannae acquired Ceridian in 2007 and made add-on acquisition of Dayforce Corporation in 2012. Dayforce founder, David D. Ossip, was named CEO of Ceridian thereafter. Ossip assumed Chairman position in August 2015.

As of December 31, 2017, Ceridian had 4,212 active employees, including 3,645 in North America, Europe, and Australia, and 567 in Mauritius.

Ceridian’s total revenue increased from US $693.9 million in 2015 to $704.2 million in 2016 and to $750.7 million in 2017. It generated HCM operating profit (loss) of $(1.1) million in 2015 compared to $(8.6) million in 2016 and $33.0 million in 2017. It generated HCM Adjusted EBITDA of $99.7 million in 2015 compared to $88.9 million in 2016 and $117.8 million in 2017.