Kronos and Ultimate Software merge creating a company worth $22 billion

Kronos Incorporated and Ultimate Software announced that they have entered into a definitive merger agreement to form one of the largest cloud companies. By bringing together two industry leaders, the transaction will create an innovative human capital management (HCM) and workforce management company to help organisations across all industries manage their people more effectively with an unparalleled combination of cloud solutions. The combined company will have enhanced scale and an even stronger position in the fast-growing HCM marketplace.

Kronos and Ultimate each have a proven track record of delivering innovative solutions to help organisations around the world drive better business outcomes, achieve a competitive advantage and create engaged workforces. The new company will bring together the best of each company’s Ultimate’s UltiPro HCM and Employee Experience products with Workforce Dimensions from Kronos, Kronos Workforce Ready, and other solutions from Kronos – with an unwavering commitment to delighting customers and exceeding their expectations.

Combining two exceptional, highly compatible cultures will create a company that is People Inspired. Kronos and Ultimate have been consistently recognised around the world as great places to work. This reflects both companies’ belief that people are at the core of an organisation’s success, and that prioritising the employee experience is the most effective way to help customers succeed.

Upon closing, the combined company will have revenues of approximately $3 billion, more than 12,000 employees worldwide, and an enterprise value of $22 billion, with further plans for growth including the addition of 3,000 employees over the next three years.

Aron Ain, Kronos Chief Executive Officer, will be the Chief Executive Officer and Chairman of the combined company – guiding an experienced executive team comprised of leaders from both Ultimate and Kronos.

Aron Ain, Chief Executive Officer, Kronos said, “I have never been more excited in my 40 years at Kronos! Combining our passionate and extremely talented Kronos and Ultimate teams will create a company that is truly People Inspired. Together, we will expand the value we deliver to customers and create the industry’s most comprehensive human capital management and workforce management solution for organisations around the world. With a combined 70 years in business, we are poised for tremendous success. For our employees, customers, and partners there is an even better future ahead. Our top priority as we complete this merger is to ensure a smooth transition for our people and continue to exceed our customers’ expectations.”

The new company will be jointly headquartered in Lowell, Mass. and Weston, Fla., with dozens of offices around the world.

Hellman & Friedman LLC (H&F), the controlling shareholder of both Kronos and Ultimate, will be the controlling shareholder of the newly formed company. Following H&F, private equity funds managed by Blackstone will be the largest minority investor, followed by GIC, Canada Pension Plan Investment Board (CPP Investments), and JMI Equity.

Adam Rogers, Chief Executive Officer, Ultimate said, “The combination of Ultimate and Kronos paves the way to deliver the next generation of employee-facing solutions that will set the standard for the workforce of the future. This merger will enable our more than 12,000 inspired people around the world to deliver innovation in human capital management faster than ever before. Both companies remain fully committed to their core strengths as well as to the combined benefits that the new company will bring to employees and customers.”

Transaction details and advisors

The all-stock merger has been unanimously approved by the boards of directors of both companies and is expected to close at the end of March.

Morgan Stanley & Co. LLC (for Kronos) and Goldman Sachs & Co. LLC (for Ultimate) acted as financial advisors and Simpson Thacher & Bartlett LLP acted as legal counsel on the transaction.