In a significant development within the technology and finance sectors, T Rowe Price Associates, the largest shareholder of Dayforce, a Minneapolis-based HR software provider, is set to oppose Thoma Bravo's proposed acquisition of the company for $12.3 billion. This acquisition, which was agreed upon in August, aims to enhance Thoma Bravo's software portfolio and increase its engagement with recurring-revenue business models, particularly in the enterprise software market.
T Rowe Price, which holds a 15.7% stake in Dayforce, has publicly articulated its discontent with the acquisition terms, specifically the buyout price of $70 per share. The asset management firm has characterized this offer as "underwhelming," arguing that it does not accurately reflect Dayforce's intrinsic value, particularly in light of the company's potential to generate $1 billion in annual free cash flow within the coming years. T Rowe believes that recent stock price weakness is a result of unfounded investor concerns that fail to align with Dayforce’s underlying fundamentals.
Despite T Rowe Price's opposition, Dayforce's stock has seen a more than 30% increase since the announcement of the deal, with shares trading just below the proposed acquisition price. This uptick demonstrates a strong market response, potentially indicating investor optimism about the company's future, despite the dissenting voice of its largest shareholder.
Looking ahead, the acquisition is expected to move towards completion, although the exact timeline remains contingent upon the resolution of shareholder votes and any necessary regulatory approvals. Thoma Bravo and Dayforce have yet to release statements addressing T Rowe Price's concerns, but the evolving situation could have broader implications for both companies' strategies and market positions.
The deal will likely face scrutiny from regulatory bodies, particularly regarding antitrust considerations, given the scale of Thoma Bravo's investment and its potential influence in the enterprise software space. As the situation develops, stakeholders will be closely monitoring how T Rowe Price's stance may impact the acquisition's viability and the operational future of Dayforce.