Paychex Inc. has completed its $4.1 billion acquisition of Paycor HCM Inc., a move that expands the company’s presence in the human capital management (HCM) market and boosts its reach among larger employers.
The deal, announced Monday, gives Paychex full ownership of Paycor in an all-cash transaction valued at $22.50 per share. It brings together two U.S.-based payroll and HCM providers with a combined offering that executives say will enhance product innovation and appeal to businesses of all sizes.
Focus on upmarket growth
The acquisition strengthens Paychex’s position in the mid- to large-size employer segment, a key area of strategic growth, said John Gibson, president and CEO of Paychex.
“This transaction strengthens our competitive position upmarket, unlocks new revenue opportunities, and positions us for sustainable long-term growth,” Gibson said. “Our integration strategy will prioritize accelerating sales expansion and product innovation.”
Gibson added that the merger combines “AI-enabled technology” with “world-class service and advisory capabilities,” allowing the company to offer a broader range of solutions across different industry sectors and business sizes.
Cost synergies and financial impact
Paychex expects to realize more than $80 million in annual cost savings beginning in fiscal 2026, along with longer-term revenue synergies. The company also said the acquisition is expected to be accretive to adjusted diluted earnings per share in fiscal 2026.
Despite the size of the acquisition, Paychex said it remains committed to its existing dividend policy and plans to maintain a strong balance sheet moving forward.
Advisors and structure
J.P. Morgan Securities LLC served as exclusive financial advisor to Paychex, with Davis Polk & Wardwell LLP acting as legal advisor. Paycor was represented by Goldman Sachs & Co. LLC and Kirkland & Ellis LLP.
Paychex said the combined company will offer the most comprehensive HCM portfolio in the industry, providing enhanced flexibility and choice for new and existing customers.
