LINCOLNSHIRE, Ill. - Alight, Inc. (NYSE:ALIT), a prominent provider of cloud-based human capital technology and services, has entered into a definitive agreement to sell certain business segments to an affiliate of H.I.G. Capital.
The deal, valued at up to $1.2 billion, includes the Professional Services segment and the Payroll & HCM Outsourcing businesses within the Employer Solutions segment. The transaction is expected to close by mid-year 2024, subject to regulatory approvals.
This strategic move is set to accelerate Alight's transformation into a focused platform company dedicated to employee wellbeing and benefits. Through this divestiture, Alight aims to enhance its margin profile by nearly 300 basis points and has raised its mid-term adjusted EBITDA margin guidance to 28%.
The company also anticipates a reduction in its net leverage ratio to below three times, aligning with its financial objectives of higher cash generation and a stronger balance sheet.
Alight's CEO, Stephan Scholl, emphasized that this transaction will increase agility and competitiveness, positioning the company to deliver innovative solutions that improve client outcomes and enhance shareholder value. Furthermore, a new commercial partnership will be established with the divested business, aiming to bolster collective competitiveness and offer a compelling value proposition for clients.
The sale includes North American and global payroll services, HCM outsourcing services, and support for applications such as Workday (NASDAQ:WDAY), SAP, and Oracle (NYSE:ORCL). Alight plans to use the net after-tax cash proceeds from the sale for debt reduction, capital return, and reinvestment into growth opportunities.
In conjunction with the transaction, Alight's Board of Directors has authorized an additional $200 million for stock repurchases, bringing the total authorized amount for repurchase to $248 million. The repurchase program is subject to various conditions and may be modified or discontinued at the company's discretion.
Alight will host a webcast today to discuss the transaction details, with presentation materials made available on the Investor Relations section of the company's website.
This news article is based on a press release statement from Alight, Inc.
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