|6 Months Ended|
Nov. 30, 2018
|Business Combinations [Abstract]|
Note D: Business Combinations
On November 23, 2018, the Company entered into a Stock Purchase Agreement (the “Agreement”) to acquire Oasis Outsourcing Group Holdings, L.P. (“Oasis”). Oasis is the nation’s largest privately owned PEO, serving more than 8,400 clients across all 50 states with its HR solutions, employee benefits, payroll administration, and risk management services.
On December 20, 2018, the Company closed its acquisition of Oasis for a purchase price of approximately $1.0 billion, net of approximately $200.0 million in cash acquired. The acquisition was financed through a combination of cash on hand of approximately $400.0 million and temporary borrowings under existing credit facilities of approximately $800.0 million. The Company is in the process of securing permanent financing for the acquisition.
Upon closing, Oasis became a wholly owned subsidiary of the Company. The allocation of aggregate purchase price to assets acquired and liabilities assumed is expected to largely consist of intangibles and goodwill. Goodwill in excess of the existing tax basis is not expected to be deductible for tax purposes and is attributable to the future economic benefits we expect to achieve and expected synergies to be realized when combining the operations of this acquisition into our existing operations. The Company is in the process of completing its accounting and valuations of Oasis and accordingly, more detailed disclosures will be provided in future filings. Supplemental pro forma information has not been provided as the Company has deemed it impracticable given the timing of the closing of the transaction and availability of Oasis financial information.
Effective February 28, 2018, the Company acquired Lessor Group (“Lessor”). Upon closing, Lessor became a wholly owned subsidiary of the Company. Lessor is a market-leading provider of payroll and HCM software solutions headquartered in Denmark and serving clients in Northern Europe. The purchase price was $162.5 million, net of $13.4 million in cash acquired. Goodwill in the amount of $111.5 million was recorded as a result of the acquisition, which is not tax-deductible. The purchase accounting is provisional and subject to change, pending completion of a final valuation of Lessor. However, further changes to goodwill resulting from the acquisition are not anticipated to be material to the Company’s Consolidated Balance Sheets.
Effective August 18, 2017, the Company acquired HROI and all of its operating subsidiaries. HROI is a national PEO that provides HR solutions to small- and medium-sized businesses in more than 35 states. The acquisition expanded the Company’s presence in the PEO industry. The purchase price was $75.4 million and was comprised of $42.2 million of cash plus $33.2 million issued in the form of Paychex common stock. Goodwill in the amount of $51.1 million was recorded as a result of the acquisition, which is not tax-deductible.
The financial results of both Lessor and HROI are included in the Company’s consolidated financial statements from the respective dates of acquisition. The Company concluded that these acquisitions were not material to its results of operations and financial position. Therefore, pro forma financial information has been excluded.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef