(Reuters) – Human resources firm Gevity HR Inc (GVHR.O) agreed to be taken private by human resources outsourcing services provider TriNet Group Inc for about $98 million in cash, nearly doubling the value of its shares.
San Francisco-based TriNet’s offer equates to $4.00 per share, which is almost double Gevity’s closing price of $2.03 on Wednesday.
The deal was backed by TriNet’s largest shareholder, General Atlantic LLC, as well as Gevity’s largest shareholder, ValueAct Capital Management LP, the companies said in separate statements.
“With both these shareholders on board, a deteriorating economy hurting Gevity’s business outlook and 97 percent premium to yesterday’s close, we expect shareholders will likely approve this deal,” analyst Tim Brown of Roth Capital Partners said in a note to clients.
Both General Atlantic and ValueAct Capital are also represented on the boards of the company they have a stake in. The boards of both companies have approved the deal.
In July last year, Bradenton, Florida-based Gevity formally sought proposals from interested parties, after it had received inquiries from several third parties to engage in strategic discussions.
At that time, Gevity had agreed to provide General Atlantic, which owns about 9.5 percent of Gevity’s outstanding stock, with certain non-public information related to the evaluation.
Gevity — which competes with Administaff (ASF.N), and the professional employer organization (PEO) divisions of Automatic Data Processing (ADP.O) and Paychex (PAYX.O) — posted a surprise quarterly loss in November as professional services suffered with fewer people being employed with clients.
The combined company will be led by TriNet’s chief executive Burton Goldfield, Gevity said in a statement.
Gevity also declared a cash dividend of 5 cents a share and said it was postponing its annual meeting.
Credit Suisse Securities LLC is advising Gevity, while Jefferies & Co Inc is advising General Atlantic and TriNet.
Gevity’s shares were trading up $1.72 at $3.75 in morning trade on Nasdaq. They had earlier risen to as much as $3.85. (Reporting by Savio D’Souza and Dhanya Ann Thoppil in Bangalore; Editing by Anil D’Silva)