NEW ORLEANS, March 30 (Reuters) - Private equity firms Bain Capital and Blackstone Group [BG.UL] are among the bidders for Ceridian Corp. (CEN.N), sources familiar with the matter said on Friday, raising the chances that the entire business services company will be sold.
But a major Ceridian shareholder, hedge fund manager William Ackman, is pushing for a spin-off of the company’s fast growing Comdata division.
Two corporations are also bidding for the company, the sources said, but it was unclear which companies were involved. Whether Bain and Blackstone are bidding as a team or separately was also unclear. Ceridian has a market value of $4.6 billion.
Ackman’s Pershing Square Capital Management, which previously prodded burger chains McDonald’s Corp. (MCD.N) and Wendy’s International Inc. WEN.N into corporate changes, has urged Ceridian to spin off Comdata and focus on running its other division, Human Resource Solutions.
Comdata offers payment processing and issues credit cards and debit cards primarily for the U.S. trucking and retail industries. HRS, the larger of the two divisions, offers payroll, benefits administration and other services.
Frustrated with Ceridian’s response to his approach, Ackman, who owns 14.3 percent of the company, is pushing ahead with plans to replace its eight-member board later this spring with industry executives and himself.
Ceridian last month said it had hired investment bank Greenhill & Co. (GHL.N) to explore a “broad range” of strategic alternatives. That range has included considering offers for the entire company, a move that has infuriated Ackman, sources familiar with his plans have said.
The hedge fund manager feels he and other shareholders stand to make significantly more money should Ceridian be split up rather than sold. Ackman has said Comdata would be more profitable as a stand-alone company.
Greenhill and Pershing Square declined to comment for this story. Bain and Blackstone also declined to comment.
Ceridian has said nothing beyond its last news release and conference call, where it announced plans to explore alternatives.
Sources close to the process have said a price tag of $40 per share, or $5.6 billion, on the whole company would earn Pershing a huge payout, but Ackman is not confident that the company would attract such a price.
Ceridian shares were off 27 cents at $32.73 on the New York Stock Exchange on Friday.
Some analysts say the stock, which trades at 26 times expected 2007 earnings -- above the sector’s average multiple of 25 and Automatic Data Processing Inc.’s ADP.N 23 -- is pricey.
Activist investor Ralph Whitworth and his firm, Relational Investors, a Ceridian shareholder, is also pushing for changes at the company.
In the 2006 fourth quarter, Comdata revenue rose 16 percent to $121.3 million, surpassing Ceridian’s expectations. HRS revenue increased 3 percent to $282.7 million, below expectations.
Comdata revenue grew 14 percent in 2006, while HRS posted a rise of 4 percent.