Paychex, Inc. Announces Pricing of its Senior Notes

Rhea-AI Summary

Paychex (Nasdaq: PAYX) has announced the pricing of a $4.2 billion senior notes offering, structured as follows:

• $1.5 billion of 5.100% notes due 2030
• $1.5 billion of 5.350% notes due 2032
• $1.2 billion of 5.600% notes due 2035

The offering is expected to close around April 10, 2025. The proceeds will primarily fund the previously announced Paycor HCM acquisition, including related fees and expenses, with remaining funds allocated for general corporate purposes. J.P. Morgan and BofA Securities are serving as joint book-running managers for the offering.

Positive

• Strategic acquisition financing secured for Paycor HCM purchase
• Successful placement of large-scale $4.2B debt offering
• Staggered maturity dates (2030-2035) provide balanced debt structure

Negative

• Significant increase in long-term debt obligations ($4.2B)
• Higher interest expenses from 5.1-5.6% rates on new debt
• Potential impact on credit metrics and financial flexibility

Insights

Corporate Finance Specialist

Paychex's $4.2 billion senior notes offering represents a significant capital raising event that provides crucial financing for its Paycor acquisition strategy. The debt structure reveals thoughtful financial planning with staggered maturities (2030-2035) and tiered interest rates (5.100% to 5.600%), optimizing the company's debt profile while securing necessary acquisition capital.

The successful pricing indicates strong institutional investor confidence in Paychex's creditworthiness and business model. In today's interest rate environment, these rates appear competitive for investment-grade corporate debt, suggesting the market views this acquisition financing favorably despite the significant leverage increase.

This transaction transforms Paychex's balance sheet, representing approximately 8.3% of its current $50.7 billion market capitalization. While the debt will increase interest expenses and financial leverage ratios, management's choice of debt over equity financing indicates confidence that the Paycor acquisition will generate returns exceeding borrowing costs without diluting existing shareholders.

The selection of JPMorgan and BofA as joint book-runners further validates the offering's credibility in capital markets. This debt issuance effectively bridges Paychex's strategic vision with executable financing, enabling the company to strengthen its competitive positioning in the growing human capital management space through inorganic growth.

Strategic M&A Analyst

This debt offering represents the financial cornerstone of Paychex's transformative acquisition of Paycor, signaling a decisive strategic shift to expand its human capital management capabilities through external growth. By securing $4.2 billion in acquisition financing, Paychex demonstrates commitment to scaling its market position in the competitive HCM landscape rather than pursuing smaller tuck-in acquisitions or organic growth alone.

The transaction reflects industry consolidation trends where established players like Paychex ($50.7B market cap) are absorbing growth-oriented competitors to enhance technological capabilities and expand market reach. Paycor's cloud-native HCM platform likely complements Paychex's existing services, potentially accelerating its digital transformation initiatives.

The debt structure's varied maturities (2030-2035) provides Paychex operational flexibility during integration while avoiding near-term refinancing pressures. This approach allows management to focus on capturing synergies and cross-selling opportunities before addressing principal repayments.

While integration execution remains the ultimate determinant of this acquisition's success, securing financing at reasonable rates removes a major hurdle to completing the transaction. This debt raise effectively transitions Paychex from announcement to implementation phase, allowing the company to proceed with combining operations, rationalize overlapping functions, and potentially gain economies of scale across its expanded client base.

ROCHESTER, N.Y.--(BUSINESS WIRE)-- Paychex, Inc. (Nasdaq: PAYX) today announced the pricing of a public offering of $4.2 billion aggregate principal amount of senior notes, consisting of $1.5 billion aggregate principal amount of 5.100% notes due 2030, $1.5 billion aggregate principal amount of 5.350% notes due 2032, and $1.2 billion aggregate principal amount of 5.600% notes due 2035. The offering is expected to close on or about April 10, 2025, subject to the satisfaction of customary closing conditions.

The intended use of the net proceeds from the offering is to fund the previously announced acquisition of Paycor HCM, Inc. (“Paycor”), including the payment of related fees and expenses, with any remaining net proceeds for general corporate purposes.

J.P. Morgan and BofA Securities are acting as joint book-running managers for the offering.

Paychex has filed a registration statement (including a prospectus and preliminary prospectus supplement) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the base prospectus in that registration statement, the applicable preliminary prospectus supplement and the other documents Paychex has filed with the SEC for more complete information about Paychex and this offering. Copies of the prospectus supplement and accompanying prospectus may be obtained from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by email at prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com, or BofA Securities, Inc. at NC1-022-02-25, 201 North Tryon Street, Charlotte, North Carolina 28255-0001, Attention: Prospectus Department, Email: dg.prospectus_requests@bofa.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the debt securities or any other securities, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering of these securities may be made only by means of the prospectus supplement and the accompanying prospectus.

About Paychex
Paychex, Inc. (Nasdaq: PAYX) is an industry-leading HCM company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance, and payroll. The company serves over 745,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The more than 16,000 people at Paychex are committed to helping businesses succeed and building thriving communities where they work and live.

Forward-Looking Statements

Certain written statements made in this Press Release may contain, and members of management may from time to time make or discuss statements which constitute, “forward-looking statements” within the meaning of the safe harbor provisions of the United States (“U.S.”) Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as “expect,” “outlook,” “will,” “guidance,” “projections,” “strategy,” “mission,” “anticipate,” “believe,” “can,” “could,” “design,” “may,” “possible,” “potential,” “should,” and other similar words or phrases. Forward-looking statements include, without limitation, all matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to the expected closing of this offering, our outlook, revenue growth, earnings, earnings-per-share growth, and similar projections, and the pending acquisition of Paycor.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to known and unknown uncertainties, risks, changes in circumstances, and other factors that are difficult to predict, many of which are outside our control. Our actual performance and outcomes, including without limitation, our actual results and financial condition, may differ materially from those indicated in or suggested by the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250408650665/en/

Investor Relations:

Jason Harbes, Director, Investor Relations

Phil Nicosia, Manager, Investor Relations

(800) 828-4411

investors@paychex.com

Media Inquiries:

Tracy Volkmann

Manager, Public Relations

(585) 387-6705

tvolkmann@paychex.com

Source: Paychex, Inc.

FAQ

What is the total value of Paychex's (PAYX) senior notes offering in 2025?

Paychex's senior notes offering totals $4.2 billion, comprising three tranches with different maturities and interest rates.

What are the interest rates and maturity dates for PAYX's senior notes?

The notes include 5.100% due 2030 ($1.5B), 5.350% due 2032 ($1.5B), and 5.600% due 2035 ($1.2B).

When will Paychex's (PAYX) senior notes offering close?

The senior notes offering is expected to close on or about April 10, 2025, subject to customary closing conditions.

What is the purpose of PAYX's $4.2 billion senior notes offering?

The proceeds will primarily fund Paychex's acquisition of Paycor HCM, including related fees and expenses, with remaining funds for general corporate purposes.

Who are the book-running managers for Paychex's (PAYX) 2025 notes offering?

J.P. Morgan and BofA Securities are acting as joint book-running managers for the offering.