Pershing Square started purchasing the stock of Ceridian Corporation in late 2006. By January 2007, Pershing Square held an 11.3% stake in Ceridian. At the inception of Pershing Square’s involvement with Ceridian, its stock was traded at approximately $23 per share.
After meeting the then-newly appointed CEO of Ceridian and understanding her strategy to extend the company well beyond its core businesses and fire the president of its Comdata division, Pershing Square became “active” with respect to its investment.
Pershing Square believed that Ceridian stock was undervalued and, in light of the newly conceived (and, in Pershing Square’s view, deeply flawed) corporate strategy, urged Ceridian to spin off its Comdata division. On January 18, 2007, Pershing Square delivered a written notice to Ceridian proposing to nominate a slate of alternative directors for election at Ceridian’s 2007 annual meeting of stockholders. The very next day, Ceridian engaged Greenhill & Co., LLC to act as its financial advisor to explore strategic and business alternatives for Ceridian and subsequently commenced a process to seek a buyer for Ceridian. As a result of the sale process, Ceridian entered into a merger agreement with private equity firm Thomas H. Lee Partners, L.P. and title insurer Fidelity National Financial Inc, which provided for the acquisition of Ceridian by THL/FNF at $36 per share.
Pershing Square believed that the $36 per share purchase price was inadequate and continued to consider with its advisors a variety of alternatives for Ceridian, including a potential sale of Ceridian, a sponsored spin-off or a recapitalization.
Pershing Square eventually supported the THL/FNF deal in light of the significant deterioration in the credit and broader markets that had made other alternatives less viable and the $36 per share offer more attractive. Pershing Square believes that its proposals and proxy contest contributed to the sale of Ceridian at approximately 56.5% above its share price at the inception of Pershing Square’s involvement with the company.
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