DEFM14A: Dayforce to Go Private in $12.3B Thoma Bravo Acquisition

Dayforce, Inc. stockholders are invited to a special meeting on November 12, 2025, to vote on a $70.00 per share all-cash acquisition by affiliates of Thoma Bravo, valuing the company at approximately $12.3 billion.

Summary

• Dayforce, Inc. has entered into an Agreement and Plan of Merger with Dawn Bidco, LLC and Dawn Acquisition Merger Sub, Inc., affiliates of Thoma Bravo, for an all-cash acquisition at $70.00 per share.
• The total funds needed to complete the merger and related transactions are approximately $12.3 billion, to be funded via equity and debt financing.
• The Board of Directors unanimously recommends that stockholders vote FOR the merger agreement proposal, FOR the advisory compensation proposal, and FOR the adjournment proposal.
• The merger consideration of $70.00 per share represents a 32% premium over the $52.88 closing price of Dayforce common stock on August 15, 2025, the last trading day prior to market speculation.
• A special meeting of stockholders will be held virtually on November 12, 2025, at 11:00 a.m. Eastern Time, to vote on the merger and related proposals.
• If the merger is consummated, Dayforce common stock will be delisted from the NYSE and TSX and deregistered under the Exchange Act, becoming a wholly-owned subsidiary of Parent.

Sentiment

Score: 8

Explanation: The filing indicates a highly favorable outcome for shareholders, with a significant premium and Board unanimity. While risks are acknowledged, the certainty of cash value and the Board's assessment of standalone risks contribute to a strong positive sentiment regarding the transaction.

Positives

• The merger consideration of $70.00 per share provides immediate, certain cash value and liquidity to stockholders.
• The $70.00 per share price represents a significant 32% premium over the unaffected closing price of $52.88 on August 15, 2025.
• The Board of Directors unanimously recommends the merger, believing it is in the best interests of the Company and its stockholders.
• The merger is not subject to any financing condition, with committed equity and debt financing in place for approximately $12.3 billion.
• The Thoma Bravo Funds have provided a limited guarantee of $712 million for certain Parent/Merger Sub obligations, including the Parent termination fee.
• Evercore Group L.L.C., the Company's financial advisor, rendered an opinion that the merger consideration is fair, from a financial point of view, to holders of Company common stock.

Negatives

• Stockholders will no longer participate in any future earnings or growth of Dayforce as it will become a private entity.
• The receipt of cash in exchange for Company common stock will be a taxable transaction for U.S. federal income tax purposes.
• Restrictions on the Company's business operations are in place until the merger is consummated, potentially delaying or preventing certain transactions or opportunities.
• If the merger is not consummated, the Company's stock price may decline from its current level, which reflects market assumptions about the merger's completion.
• The Company may be obligated to pay a termination fee of $351 million to Parent under certain circumstances if the merger is not completed.

Risks

• The HCM industry is highly competitive, with increasing intensity as larger incumbents enter the mid-market segment where Dayforce primarily operates.
• Uncertainty exists regarding Dayforce's ability to continue substantial sales and revenue growth and to sustain and expand margins while maintaining service quality.
• There is execution and market risk associated with achieving the Company's long-range financial targets, including $1 billion in free cash flow by 2031.
• The Company's revenue mix, including float revenue (from investing customer funds) and services-related revenue, and its trading multiples relative to peers, pose risks.
• Potential pressure to reduce share-based compensation expense could impact the Company's ability to retain and incentivize employees.
• The impact of artificial intelligence (AI) on general employment levels and Dayforce's ability to innovate, scale, and monetize its AI investments creates significant uncertainty.
• Macroeconomic risks, such as declining interest rates affecting float revenue and reduced employment levels impacting overall revenues, could adversely affect the Company.
• Operational risks include potential negative impacts on customer reputation due to software infrastructure management, information security breaches, loss of customer funds, or dissatisfaction with implementation services.
• Risks and costs to the Company if the merger does not close on time or at all, including potential negative impact on employee retention, business disruption, and reputational harm.
• Regulatory agencies may delay, object to, or challenge the merger, or impose materially burdensome conditions, despite efforts to obtain approvals.
• Provisions in the merger agreement restrict Dayforce's ability to solicit or negotiate alternative takeover proposals, and a $351 million termination fee could discourage competing bids.
• The exchange of common stock for cash is a taxable event for U.S. federal income tax purposes.
• Potential for litigation in connection with the merger, including stockholder demands or claims.

Future Outlook

The merger is expected to be consummated in early 2026, subject to stockholder approval and regulatory clearances. Following completion, Dayforce will become a wholly-owned subsidiary of Parent, and its common stock will be delisted from the NYSE and TSX, and deregistered under the Exchange Act. The Company will cease to be a publicly traded entity.

Management Comments

• The Board (1) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the transactions contemplated by the merger agreement; (2) determined that it is in the best interests of the Company and its stockholders for the Company to enter into the merger agreement and declared the merger agreement advisable; (3) directed that the Company submit the adoption of the merger agreement to a vote of the holders of Company common stock and the holder of the special voting share; and (4) resolved to recommend that the Holders adopt the merger agreement.
• The Board recommends you vote FOR the merger agreement proposal, FOR the advisory compensation proposal and FOR the adjournment proposal.
• The Board ultimately determined that the certainty of value provided by the acquisition of the Company by Parent for $70.00 per share in cash was more favorable to Company stockholders than the risk-adjusted value of remaining an independent public company, after accounting for the significant risks and uncertainties that the Company would face if it continued to operate on a standalone public company basis.

Industry Context

Thoma Bravo is a leading private equity firm specializing in the software and technology-enabled services sectors. The financial advisor's presentation highlighted market underperformance in the HCM industry and Dayforce's negative divergence from its peers in market performance. Factors contributing to this dislocation included macroeconomic uncertainty, idiosyncratic international exposure, lower free cash flow compared to peers, a high mix of float and professional services revenue, and investor questions regarding the Company's ability to achieve long-term financial targets. The potential impact of artificial intelligence (AI) on the HCM industry, including general employment levels, was also noted as a significant uncertainty.

Comparison to Industry Standards

• Evercore's selected public company trading analysis compared Dayforce to Workday, Inc., Paycom Software, Inc., and Paylocity Holding Corporation.
• The analysis indicated that Dayforce traded at a premium to its peers based on unlevered free cash flow, which was amplified when including share-based compensation expense.
• Investment Bank A's presentation noted that Dayforce had negatively diverged from its HCM peers with respect to market performance.
• Thoma Bravo's representatives cited concerns about the exit multiple on their investment and various headwinds facing the Company, including risks to achieving long-term financial targets, as justification for their proposed $70.00 price.

Management Changes

Corporate Governance

Legal Proceedings

• The filing acknowledges the potential for 'Transaction Litigation' (stockholder demands, litigations, arbitrations, or other similar claims) against the Company, its subsidiaries, and/or its directors or officers relating to the merger agreement or transactions.
• The Company and Parent have agreed to cooperate in the defense or settlement of any such Transaction Litigation, and neither party will settle without the other's prior written consent (unless adverse to each other or related to a Takeover Proposal).

Related Party Transactions

• Dayforce's directors and executive officers have interests in the merger that differ from general stockholders, including cash payments for vested equity awards.
• Non-employee directors hold unvested Director RSUs that will fully vest at the effective time, converting into cash payments.
• Executive officers hold unvested Company RSUs and PSUs that will be converted into Replacement Awards, subject to continued service and double-trigger vesting upon termination without cause within 12 months post-merger.
• Most executive officers are party to employment agreements providing for severance payments and benefits upon a qualifying termination of employment without cause following the merger.
• Directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement and existing agreements.

Stakeholder Impact

• Shareholders: Will receive $70.00 in cash per share, representing a significant premium and immediate liquidity, but will no longer hold equity in the company.
• Employees (Continuing Employees): Will receive base salary and target annual/short-term cash incentive opportunities no less favorable for 12 months post-merger, along with comparable severance benefits and other employee benefit plans (excluding certain benefits).
• Equity Award Holders: Vested awards will be cashed out; unvested awards will convert to Replacement Awards with similar vesting terms, including double-trigger vesting for executive officers.
• Customers: The merger is expected to transition Dayforce into a private entity under Thoma Bravo, a firm focused on software and technology, which may lead to strategic shifts or continued investment in the HCM platform.
• Suppliers/Vendors: The Company is restricted from certain actions that could impact material contracts, aiming to preserve existing relationships.

Next Steps

• Hold a virtual special meeting of stockholders on November 12, 2025, to vote on the merger agreement, advisory compensation, and adjournment proposals.
• Obtain required regulatory approvals, including HSR Act clearance (expected to expire October 20, 2025), Competition Act approval in Canada, antitrust approval in Australia, and approval from the Foreign Investment Review Board in Australia.
• Obtain approval or nondisapproval letters from the Office of the Comptroller of the Currency (OCC) and certain state financial regulatory authorities.
• Consummate the merger, expected in early 2026, following satisfaction or waiver of all conditions.
• Cause Dayforce common stock to be delisted from the NYSE and TSX and deregistered under the Exchange Act post-merger.

Key Dates

Recommendation

The Board of Directors unanimously recommends the merger, and Evercore's opinion supports the fairness of the $70.00 per share cash consideration. This price represents a substantial 32% premium over the unaffected share price, offering immediate and certain value to stockholders. The absence of a financing condition and the high probability of consummation further de-risk the transaction for investors. Given the premium and the Board's assessment that this is more favorable than the risk-adjusted standalone value, a strong buy is warranted for investors seeking to capture this premium.

Keywords

Dayforce, Thoma Bravo, Merger, Acquisition, Human Capital Management, HCM Software, Private Equity, Cash Acquisition, SEC Filing, Proxy Statement, Corporate Governance, Shareholder Vote, NYSE, TSX, Delisting, Deregistration