8-K: Dayforce to Go Private in $12.3B Thoma Bravo Deal

Dayforce, Inc. has entered into a definitive agreement to be acquired by affiliates of Thoma Bravo for US$70.00 per share in cash, valuing the company at US$12.3 billion.

Summary

• Dayforce, Inc. will become a privately held company through an all-cash acquisition by Dawn Bidco, LLC and Dawn Acquisition Merger Sub, Inc., affiliates of Thoma Bravo.
• The transaction values Dayforce at an enterprise value of US$12.3 billion.
• Dayforce stockholders will receive US$70.00 per share in cash, representing a 32% premium over the company's unaffected closing share price on August 15, 2025.
• A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will make a significant minority investment.
• The Dayforce Board of Directors has approved the Merger Agreement and recommends its adoption by stockholders.
• The merger is expected to close in early 2026, subject to customary closing conditions, including stockholder and regulatory approvals.
• The transaction is not subject to a financing condition.
• Outstanding vested stock options with an exercise price less than US$70.00, and vested restricted stock units (RSUs) and performance-based restricted stock units (PSUs) will be converted into cash payments based on the US$70.00 per share Merger Consideration.
• Unvested RSUs and PSUs will be converted into cash payment rights, subject to continued service and original vesting terms (performance conditions for PSUs deemed 100% achieved).
• Unvested stock options and options with an exercise price equal to or greater than US$70.00 will be cancelled without consideration.
• The company's Global Employee Stock Purchase Plan (GESPP) will be terminated, with outstanding purchase rights exercised prior to the merger's effective time.

Sentiment

Score: 9

Explanation: The sentiment is highly positive due to the substantial premium offered to shareholders, the all-cash nature of the deal, and the strategic partnership with a leading software investment firm aimed at accelerating growth and AI leadership. The transaction provides immediate and certain value to investors.

Positives

• The acquisition offers a substantial 32% premium to Dayforce stockholders based on the unaffected share price, providing immediate and significant cash value.
• The partnership with Thoma Bravo, a leading software investment firm, is expected to accelerate Dayforce's growth, enhance customer value, and strengthen its leadership in AI within the Human Capital Management (HCM) sector.
• The transaction is all-cash, providing certainty and liquidity to stockholders and eliminating future market volatility risk for their investment.
• The deal is not subject to a financing condition, reducing a common risk factor for mergers and acquisitions.

Negatives

• Upon completion, Dayforce's common stock will no longer be listed on public stock exchanges (NYSE and TSX), removing the opportunity for public market participation and potential future appreciation for current stockholders.
• The company will lose its status as a publicly traded entity, which may reduce transparency and public scrutiny.

Risks

• The merger is subject to various customary closing conditions, including Dayforce stockholder approval and receipt of required regulatory approvals (e.g., Hart-Scott-Rodino Antitrust Improvements Act, Competition Act (Canada), Office of the Comptroller of the Currency, and other Antitrust and FDI Laws).
• The occurrence of any event, change, or other circumstances could give rise to the termination of the Merger Agreement.
• There is a risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all.
• The proposed transaction could disrupt management time from ongoing business operations.
• Announcements relating to the proposed transaction could have adverse effects on the market price of Dayforce's common stock prior to closing.
• Unexpected costs or expenses may result from the proposed transaction.
• Potential litigation relating to the proposed transaction could arise.
• The transaction and its announcement could adversely affect Dayforce's ability to retain and hire key personnel and maintain relationships with customers, vendors, partners, employees, and other business relationships, impacting operating results and business generally.

Future Outlook

Dayforce anticipates that partnering with Thoma Bravo will accelerate its business, with a focused allocation of resources and product innovation aimed at advancing its position as a leader in Human Capital Management (HCM) for a world increasingly shaped by AI. The company expects to deepen customer impact and drive further innovation across the global HCM landscape.

Management Comments

• "Dayforce has always stood for a bold promise: to make work life better. As one of the world's leading enterprise software investors, Thoma Bravo's commitment amplifies this promise as we partner to grow our business, increase quantifiable value for customers, and further secure our position in AI as a generational software company." David Ossip, Chair and CEO of Dayforce
• "With Thoma Bravo, we are partnering with a truly special organization to accelerate our business with our focus, resources, and product innovation all laser-pointed on leaping forward as the HCM leader for a world of work shaped by AI." David Ossip, Chair and CEO of Dayforce
• "The Board of Directors believes this transaction will provide immediate and substantial value to Dayforce stockholders and recognizes the valuable organization that the team has built." Gerald Throop, Lead Independent Director of Dayforce
• "We are thrilled to be investing in Dayforce, a clear category leader that is poised to define the future of HCM in the age of AI." Holden Spaht, Managing Partner at Thoma Bravo
• "Dayforce's differentiated platform, global scale, and world-class team make it well-positioned to meet the growing and evolving needs of employers and employees around the world. We see significant opportunity to accelerate growth, deepen customer impact, and continue to drive innovation across the global HCM landscape." Holden Spaht, Managing Partner at Thoma Bravo
• "Dayforce has built an exceptional business by pairing relentless innovation with a deep commitment to its customers. This combination has fueled strong growth and established Dayforce as a partner of choice in HCM. We are excited to build on this strong foundation and momentum alongside them, helping them to move faster, think bigger, and unlock even more market and product potential." Tara Gadgil, Partner at Thoma Bravo

Industry Context

This acquisition highlights the continued strong interest of private equity firms, particularly those specializing in software like Thoma Bravo, in the Human Capital Management (HCM) technology sector. The emphasis on AI in HCM, as noted by Dayforce's CEO, reflects a broader industry trend where artificial intelligence is becoming a critical differentiator for platforms seeking to optimize workforce potential and operational efficiency. The investment from ADIA also signals confidence in the long-term growth prospects of the HCM market and Dayforce's position within it.

Comparison to Industry Standards

• The 32% premium offered to Dayforce stockholders is a strong indicator of value, often exceeding typical premiums in public-to-private transactions, reflecting the perceived strategic value and growth potential of Dayforce's HCM platform.
• While specific comparable companies or projects are not detailed in the filing, the valuation of US$12.3 billion for a global HCM technology leader suggests a robust market for established, innovative software companies, particularly those with a focus on AI-powered solutions.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions the risk of 'Transaction Litigation' (stockholder demands, litigations, arbitrations, or other similar claims relating to the Agreement or Transactions) and outlines cooperation and settlement terms for such actions.

Related Party Transactions

• The core transaction involves Dayforce, Inc. entering into a Merger Agreement with Dawn Bidco, LLC and Dawn Acquisition Merger Sub, Inc., which are affiliates of Thoma Bravo Fund XVI, L.P. and other Thoma Bravo investment funds.
• The transaction also includes a significant minority investment from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

Stakeholder Impact

• **Shareholders**: Will receive a significant cash premium of 32% over the unaffected share price, providing immediate liquidity and a favorable exit.
• **Employees**: Continuing employees are guaranteed no less favorable base salary and target cash incentives for 12 months post-merger, and comparable severance benefits. Unvested equity awards will convert to cash payment rights, subject to continued service, providing a clear path for their value realization.
• **Customers**: Management expects to deepen customer impact and accelerate innovation, suggesting potential benefits from increased investment and strategic focus under private ownership.
• **Vendors/Partners**: The company aims to preserve existing relationships with key business partners, indicating an intent to maintain operational continuity.
• **Management**: The existing officers of Dayforce will become the officers of the Surviving Corporation, suggesting continuity in leadership, albeit under new ownership.

Next Steps

• Dayforce will prepare and file a preliminary proxy statement with the SEC and Canadian securities regulators.
• Dayforce will mail a definitive proxy statement to its stockholders and holders of exchangeable shares.
• Dayforce will hold a Company Stockholders Meeting to obtain the Company Stockholder Approval.
• The parties will seek and obtain required regulatory approvals, including antitrust clearances (HSR Act, Competition Act) and banking authority approvals (OCC).
• Dayforce will take actions to cause CallCo to acquire outstanding Exchangeable Shares for Company Common Stock prior to the Effective Time.
• The Company and Parent will cooperate on notices and supplemental indentures related to the Company Convertible Notes.
• The Company may take actions to unwind or settle Capped Call Transactions.
• Upon completion of the transaction, Dayforce Common Stock will be delisted from the NYSE and TSX, and deregistered under the Exchange Act.

Key Dates

Recommendation

For current Dayforce stockholders, the definitive agreement to be acquired at US$70.00 per share represents a substantial 32% premium over the unaffected share price. This all-cash transaction provides immediate and certain value, significantly de-risking the investment from future market fluctuations or operational challenges. Given the premium and the certainty of the cash payout, the recommendation for existing holders is to 'strong buy' to capture the premium if the stock is trading below the offer price, or 'hold' if it is trading near the offer price, awaiting the closing. For new investors, a 'buy' could be considered if the stock trades at a discount to the offer price, representing an arbitrage opportunity, assuming the high likelihood of deal completion.

Keywords

HCM, Human Capital Management, Software, Private Equity, Thoma Bravo, Dayforce, Merger, Acquisition, AI, Enterprise Software, SEC Filing, 8-K