Activist investor William Ackman, currently battling for board seats at Automatic Data Processing, on Thursday said the human resource software company should buy rival Ceridian, in a move that could woo customers with a better product.
Ackman said Minnesota-based Ceridian could be acquired for roughly $4 billion, adding, "This may be a case where a larger-than-typical acquisition makes a lot of sense."
Ackman was interviewed by Sanford C. Bernstein & Co. investment analyst Lisa Ellis in a webcast. Ellis also spoke with Ackman-backed board nominees Veronica Hagen and Paul Unruh as the trio sought to lay out how they would improve operations at ADP should they be elected to the 10-person board on Nov. 7.
Ackman's hedge fund Pershing Square Capital Management invested in Ceridian a decade ago before the company was bought by a private equity firm, Thomas H. Lee Partners. ADP buying Ceridian would deliver a "best in class product" to ADP and help win back hundreds of customers who have recently defected, Ackman said.
Neither ADP nor Thomas H. Lee Partners was immediately available for comment after normal business hours.
"They need to think outside the box," Ackman said, noting that an acquisition like this would let ADP put its resources behind a better product.
ADP has characterized the 51-year-old investor as an aggressive risk and its chief executive, Carlos Rodriguez, told Reuters on Wednesday that the hedge fund manager's plans for beefing up profit could be realized only by laying off roughly 30 percent of ADP's workforce.
Ackman said previously in an investor webinar that he is not calling for massive layoffs.
Ackman also pushed back on Thursday on the way Rodriguez describes him, saying his takeover plan is not a "swing for the fences" strategy. "It may be the lowest-risk solution to acquire a viable product that has significant market acceptance," he said.