Paychex to Acquire Paycor; Maintaining Our Fair Value Estimate for Paychex

Paychex has announced it intends to acquire Paycor in an all-cash deal for $22.50 per share, or roughly $4.1 billion in enterprise value. The deal is expected to close in the first half of 2025, which we see as realistic as we do not expect any major regulatory pushback in what is a relatively fragmented human capital management, or HCM, space. We are maintaining our fair value estimate for Paychex of $130 per share, as we believe the value of the deal will primarily come down to revenue synergies, which we do not want to give full credit for just yet. Overall, we think the deal makes strategic sense and will come down to execution on product integration, salesforce integration, and cross-selling.