T Rowe Price Associates, the largest shareholder in HR software provider Dayforce, is planning to vote against Thoma Bravo’s proposed $12.3bn acquisition of the company, arguing that the offer undervalues the business, according to a report by Reuters.
The asset manager, which holds a 15.7% stake in Dayforce according to LSEG data, described the buyout price of $70 per share as “underwhelming” and said recent weakness in the stock has been driven by misplaced investor concerns that fail to reflect the company’s underlying fundamentals.
“These forces are temporary and do not justify selling the company at an underwhelming valuation at this time,” T Rowe Price said in a statement, adding that Dayforce remains on track to generate $1bn in annual free cash flow within the next few years.
Thoma Bravo agreed in August to acquire the Minneapolis-based company as part of its strategy to expand its software portfolio and increase exposure to recurring-revenue business models. The private equity firm has been among the most active investors in enterprise software, targeting scalable platforms that can perform through economic cycles.
Despite the opposition, Dayforce shares have climbed more than 30% since the deal’s announcement, closing just below the offer price this week. Thoma Bravo and Dayforce have not yet commented on T Rowe Price’s statement.
