Morningstar | Paychex to Acquire Country's Largest Privately Held Paid Employer Organization
Today, wide-moat Paychex announced it is dropping $1.2 billion to acquire Oasis Outsourcing, the nation’s largest privately held professional employer organization, continuing the company’s recent acceleration in M&A. This is the third acquisition to be announced since August 2017 and Paychex’s second purchase of a paid employer organization during that time. Previously, the company acquired the smaller HR Outsourcing Inc. Oasis marks Paychex’s largest acquisition in its history. The acquisition will immediately increase the number of Paychex’s worksite employees by about 10%. Despite the size of the acquisition, the company said it expects the acquisition will have minimal impact on earnings in fiscal 2019. Given the company’s announcement provided few details other than price and number of worksite employees, we’ll be maintaining our fair value estimate of $58 per share.From a strategic standpoint, the deal makes sense to us give Paychex’s recent strength on HR services, but we’ll reserve judgment on the price until after the company’s earnings call on Dec. 19.
Paychex is a provider of integrated human capital management (HCM) solutions for payroll, benefits, human resource (HR), and insurance services for small- to medium-sized businesses. The company's portfolio of HCM and employee benefit-related services include: payroll processing services; payroll tax administration services; employee payment services; regulatory compliance services (new-hire reporting and garnishment processing); HR Solutions Administrative Services Organization; retirement services administration; HR administration services, including time and attendance; other HR services and products; business services; Professional Employer Organization services; and insurance services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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