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BAIN, BLACKSTONE AMONG CERIDIAN BIDDERS: SOURCES
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| By Michael Flaherty
Fri Mar 30, 1:48 PM ET
NEW ORLEANS (Reuters) - Private equity firms Bain Capital
and Blackstone Group (BG.UL) are among the bidders for Ceridian
Corp. (NYSE:CEN - news), sources familiar with the matter said on Friday,
raising the chances that the entire business services company
will be sold.
Two corporations are also bidding for the company, the
sources said, but it was unclear which companies were involved.
Whether Bain and Blackstone are bidding as a team or separately
was also unclear. Ceridian has a market value of $4.6 billion.
The pursuit of the whole company comes as a major Ceridian
shareholder, hedge fund manager William Ackman, pushes for a
spin-off of Ceridian's fast growing Comdata division.
Ceridian shares rose $1.87 or 5.7 percent to $34.87 in
afternoon dealings after the Reuters report on the bids. Its
stock had been flat to down throughout the morning.
Ackman's Pershing Square Capital Management, which
previously prodded burger chains McDonald's Corp. (NYSE:MCD - news) and
Wendy's International Inc. (NYSE:WEN - news) into corporate changes, has
urged Ceridian to spin off Comdata and focus on running its
other division, Human Resource Solutions.
Comdata offers payment processing and issues credit cards
and debit cards primarily for the U.S. trucking and retail
industries. Human Resource, the larger of the two divisions,
offers payroll, benefits administration and other services.
Frustrated with Ceridian's response to his approach,
Ackman, who owns 14.3 percent of the company, is pushing ahead
with plans to try to replace its eight-member board later this
spring with industry executives and himself.
Ceridian last month said it had hired investment bank
Greenhill & Co. (NYSE:GHL - news) to explore a "broad range" of strategic
alternatives. That range has included considering offers for
the entire company, a move that has infuriated Ackman, sources
familiar with his plans have said.
The hedge fund manager feels he and other shareholders
stand to make significantly more money should Ceridian be split
up rather than sold. Ackman has said Comdata would be more
profitable as a stand-alone company.
Greenhill and Pershing Square declined to comment for this
story. Bain and Blackstone also declined to comment.
Ceridian has said nothing beyond its last news release and
conference call, in which it announced plans to explore
alternatives.
Sources close to the process have said a price tag of $40
per share, or $5.6 billion, on the whole company would earn
Pershing a huge payout, but Ackman is not confident that the
company would attract such a price.
Some analysts say the stock, which has traded at 26 times
expected 2007 earnings -- above the sector's average multiple
of 25 and Automatic Data Processing Inc.'s (NYSE:ADP - news) 23 -- is
pricey.
Activist investor Ralph Whitworth and his firm, Relational
Investors, a Ceridian shareholder, are also pushing for changes
at the company.
In the 2006 fourth quarter, Comdata revenue rose 16 percent
to $121.3 million, surpassing Ceridian's expectations. Human
Resource revenue increased 3 percent to $282.7 million, below
expectations.
Comdata revenue grew 14 percent in 2006, while Human
Resource posted a rise of 4 percent.
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