Ultimate Software Announces Agreement to be Acquired by an Investor Group

WESTON, Fla.–Ultimate Software (Nasdaq:ULTI), a leading global provider of human capital management (HCM) solutions in the cloud, today announced that it has entered into a definitive merger agreement to be acquired by an investor group led by Hellman & Friedman (“H&F”), a leading private equity investment firm, in an all-cash transaction for $331.50 per share in cash — representing an aggregate value of approximately $11 billion — after which Ultimate Software (“Ultimate”) will operate as a privately held company.

Under the terms of the agreement, all Ultimate stockholders of record will receive $331.50 in cash for each share of Ultimate’s common stock held upon the closing of the transaction. This price represents a premium of approximately 32% over Ultimate’s volume-weighted average price during the 30 trading days ending February 1, 2019, and a premium to Ultimate’s all-time high closing share price. Ultimate’s Board of Directors has unanimously approved this transaction and recommended that stockholders vote in favor of the transaction.

Upon completion of the transaction, Ultimate will continue to operate under the leadership of CEO Scott Scherr and the existing senior management team. The privately held company will be owned by an investor group led by Hellman & Friedman in partnership with significant investors Blackstone, GIC, and Canada Pension Plan Investment Board (CPPIB), and other investors including JMI Equity.

“The transaction provides our stockholders with a substantial premium. Our decision was also made with the best interests of our 5,144 employees and our more than 5,600 customers at heart. This change will bring meaningful benefits to our employees and customers — both in the long and short terms. Since all of our employees are given equity in Ultimate when they join us, as stockholders, this transaction will result in immediate financial upside for them. Today’s announcement will also allow us to make additional, prudent investments in our products and services to better serve our customers,” said Scott Scherr, CEO, president, and founder of Ultimate.

“Our customers will benefit from our ability to bring new features and services to market more quickly, while still enjoying the same high level of service they have with Ultimate today, or better, with new innovations to our offerings. Hellman & Friedman is in full alignment with our vision to serve the global HR market, while preserving our unique company culture and mission,” said Scherr.

For almost 29 years, Ultimate has focused exclusively on helping businesses improve the experience of their employees through leading HR and payroll solutions, and in recent years, through a comprehensive human capital management suite. At the end of 2018, Ultimate’s total revenues exceeded $1.1 billion and the company currently serves more than 5,600 companies worldwide, with more than 48 million people records in the cloud. After the transaction is complete, Ultimate will continue to develop, market, deliver, and service its suite of human capital management and employee experience solutions globally — including HR, payroll, benefits management, talent acquisition, talent management, workforce management, employee sentiment analysis, and HR service delivery — with no changes to the markets Ultimate serves and no changes to its mission: put “People First.”

“Ultimate’s market leadership in the human capital management segment, and the company’s impressive track record of growth, are built on the outstanding quality of its software and its dynamic and motivated employees. The company deeply understands the essence of human capital management, having itself been recognized with numerous best workplace awards from leading publications for its exceptional mission-driven culture,” said David Tunnell, partner at Hellman & Friedman. “We look forward to building on Ultimate’s successes, working along with our investment partners: Blackstone, GIC, CPPIB, and JMI Equity.”

Martin Brand, senior managing director at Blackstone, added, “We are excited to partner with Ultimate and this investor group to support the strong growth and culture of this exceptional company.”

The transaction is expected to close in mid-2019, subject to stockholder approval and other customary closing conditions including regulatory approvals.

The definitive agreement for the transaction includes a 50-day “go-shop” period which permits Ultimate’s Board of Directors and financial advisor to actively initiate, solicit, and encourage alternative acquisition proposals, and potentially enter negotiations with other parties that make alternative acquisition proposals. Ultimate will have the right to terminate the merger agreement to accept a superior proposal subject to the terms and conditions of the merger agreement. There can be no assurance that this 50-day “go-shop” will result in a superior proposal, and Ultimate does not intend to disclose developments with respect to the solicitation process unless and until the Board of Directors makes a determination requiring further disclosure.

Goldman Sachs & Co. LLC acted as exclusive financial advisor to Ultimate Software, and Stroock & Stroock & Lavan LLP provided legal counsel. Qatalyst Partners acted as financial advisor to the investor group and Simpson Thacher & Bartlett served as legal counsel to Hellman & Friedman.


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