Ceridian Agrees to Buy Comdata Holdings for $900 Million in Stock
MINNEAPOLIS (AP) _ Ceridian Corp. will expand its information services business in a deal to acquire Comdata Holdings Corp. for $900 million in stock.
Comdata provides financial services for the gambling and transportation industries, such as providing cash advances to truckers for fuel. It also provides information and software that trucking companies use in deploying fleets.
Ceridian processes payrolls, measures radio audiences and builds defense electronics. The acquisition would boost Ceridian’s annual revenue by nearly a third to $1.3 billion.
Under the deal, Comdata shareholders would get 0.57 of a share of Ceridian common stock for each Comdata share.
Wall Street applauded the merger plans, which were announced before the start of trading Thursday. Comdata leaped $4.31 to close at $24.19 a share in trading on the Nasdaq Stock Market and Ceridian was up $2.25 to end at $44.12 1/2 on the New York Stock Exchange.
Lawrence Perlman, chairman and chief executive of Bloomington, Minn.-based Ceridian, said the purchase is ``a major step forward in Ceridian’s strategy of aggressively growing its information services business.″
Ceridian was created in 1992 when Control Data Corp. spun off its computer business. The remaining company took the name Ceridian. Comdata would be its 11th acquisition since then.
When the transaction is complete, Ceridian will be No. 1 in transportation funds transfer services and gambling cash advance services, said Ceridian spokeswoman Nancy Folz.
Ceridian’s largest businesses are Ceridian Employer Services, the Arbitron Company and Computing Devices International.
Comdata, based in Brentwood, Tenn., will retain its name and operate as an independent unit of Ceridian. Its management team and 1,850 employees will remain with the company and Comdata chairman and chief executive George L. McTavish will report to Perlman.
``This transaction will greatly enhance Comdata’s operating and financial flexibility, which we believe will translate into increased growth,″ McTavish said.
Comdata reported earnings of $28.1 million in 1994 on revenue of $243 million. Approximately 60 percent of the revenue came from transportation services, with the balance coming from gambling-related services.
Comdata serves more than 16,000 trucking companies, 8,000 truck stops and 900 gambling locations.
Ceridian said the boards of both companies unanimously approved the transaction. The deal still must be approved by shareholders of the companies and clear regulatory review, but Ceridian said it expects the acquisition to be completed by early December.