Dayforce Shareholders Say “Merger Price is Right” in Stinging Rebuke of T. Rowe Opposition Campaign

Earlier today, Dayforce shareholders overwhelmingly approved the $12.3 billion all-cash acquisition of the company by Thoma Bravo in a resounding rejection of an attempt to block the transaction by T. Rowe Price Associates (T. Rowe), the company’s largest shareholder with 15.5% ownership. Preliminary votes show that approximately 88.4% of votes cast, representing 79% of the outstanding voting power, voted in favor of the transaction, with virtually every shareholder other than T. Rowe voting in favor of the merger.

On August 21, 2025, Dayforce, a global human capital management (HCM) software company providing HR, payroll, tax and other workplace solutions, announced that it had entered into a definitive agreement to be acquired by Thoma Bravo in the largest standalone enterprise software deal ever led by a private equity firm. The $70 all-cash merger consideration represented a 32% premium to the unaffected share price. Two weeks after the deal announcement and prior to the proxy statement being filed, T. Rowe sent a scathing letter addressed to the independent directors of Dayforce criticizing the transaction as an opportunistic transfer of value from public-market investors to private investors and made a number of unfounded and incorrect statements about the transaction process. A few weeks later, in an unusually aggressive and hostile action, T. Rowe made a public 13D control filing and issued an open letter to Dayforce stockholders expressing its opposition to the merger and its plans to actively engage in discussions with other shareholders to persuade them to vote against the merger. It called the deal value “underwhelming” and stated that the stock had been “pressured by misplaced short-term pessimism on the sector as a whole and investor focus on metrics that are not reflected of the underlying strength in the business.” The letter itself was notably toned down from the initial private letter and contained no criticisms of the transaction process, with the record having been set straight by Dayforce in its proxy statement and in a meeting between T. Rowe and representatives of the Dayforce board following receipt of the first letter.

After the initial public offensive, T. Rowe largely fought its battle against the transaction out of public view by seeking to persuade other large shareholders and ISS to oppose the transaction. Dayforce had a highly concentrated shareholder base as of the record date, with its top seven stockholders owning 70.1% of the voting shares, with five active managers owning 52.8%. The threshold required for approval of the merger was 50%. Initially, there appeared to be support for T. Rowe’s position among certain of these active managers with one large shareholder telling the company that it planned to vote against the transaction and others appearing receptive to the sentiment expressed by T. Rowe.

Dayforce ultimately succeeded in persuading shareholders that the Thoma Bravo transaction represents the value-maximizing choice for shareholders. Dayforce employed an effective strategy focused on winning the proxy advisory firms and obtained recommendations “FOR” the transaction from ISS and Glass Lewis. Today’s Wall Street Journal indicates that the proxy advisory firms are under scrutiny by the administration, but they currently have outsized influence in a merger contest as shown here. Dayforce also employed a successful legal strategy that delivered T. Rowe a significant setback due to T. Rowe’s failure to appreciate the bank control limitations and regulations that apply to Dayforce as a result of its OCC-regulated trust bank subsidiary. After receipt of a legal letter from Dayforce pointing out potential violations of the banking regulations, T. Rowe suddenly and without public explanation switched from being a 13D control investor to a passive non-controlling 13G investor with a little over a week remaining prior to the shareholder meeting. Many investors interpreted this move as T. Rowe giving up the fight. The bank regulatory control issues also limited the shares that T. Rowe could vote against the deal to 10%.

Dayforce’s resounding victory at the shareholder meeting offers a number of useful lessons:

• A Financially Compelling Merger with a Strong Strategic Rationale and Robust Transaction Process Can Withstand Opposition from a Large Stockholder. A merger will not successfully withstand opposition from a large stockholder or receive recommendations from the proxy advisory firms unless the company is able to convincingly demonstrate that the transaction is in the best interest of shareholders. Dayforce did just that in its proxy statement and the other supplemental disclosures that it provided to investors which showed that the Thoma Bravo transaction provides stockholders with a compelling valuation and the present value of the company’s longrange plan.

The $70 all cash consideration provided a 32% premium to the unaffected trading price and was at the upper end of the standalone discounted cash flow range that was based on the Company’s long-range management plan, which included publicly announced 2031 financial targets. The valuation multiples compared favorably to precedent transactions and the valuation of the Company’s peers.

T. Rowe never presented a viable alternative to the Thoma Bravo transaction other than Dayforce remaining independent and pursuing its stand-alone plan. The Board had thoroughly evaluated the Thoma Bravo transaction relative to the stand-alone plan and was very focused on the risks to the business. The all-cash transaction transferred all of these risks to the buyer. These risks included lower employment levels due to macroeconomic factors adversely impacting Dayforce’s per-employee based revenue model, lower interest rates negatively impacting its high-margin float revenue derived from interest on customer funds and AI-related uncertainty on competition and employment levels, as well as operational risks in its business. The Board had also been concerned by market related risks as the HCM-sector had suffered from underperformance compared to the market generally and these headwinds appeared to be accelerating. HCM software peer multiples had compressed because of lower growth expectations and Dayforce’s multiples had compressed even more relative to its peers. The Board had carefully evaluated all of these risks and believed that the Thoma Bravo transaction was the best alternative for shareholders on a risk-adjusted basis.

The Board’s views were validated during the period between the announcement of the transaction and the shareholder vote. Dayforce’s peers continued to underperform against the market after the transaction was announced in August. Dayforce also announced earnings two weeks prior to the shareholder vote, and recurring revenues were adversely impacted by lower employment levels at its customers, a trend also cited by peers in the sector. These developments served as a strong rebuttal to the rosy arguments being put forth by T. Rowe and made clear the significant down-side risk facing shareholders if they didn’t approve the merger.

• Proxy Statement Must Present a Persuasive Narrative Supporting the Board’s Decision and Process. Many observers incorrectly view the proxy statement in a merger as a boilerplate or routine exercise. In reality, disclosures regarding the background and Board’s reasons for the transaction are important in a contentious transaction. Boards have a duty to communicate candidly with shareholders and to ensure that the board’s rationale for supporting a merger is clearly and accurately conveyed to shareholders through the company’s proxy materials. The proxy statement should provide shareholders with visibility into the Board’s process and decisionmaking so that they can evaluate whether the Board optimized the outcome for shareholders.

The Dayforce proxy statement provides shareholders with visibility into a process led by deeply engaged and highly qualified independent directors over 11 months. The proxy statement shows the Board’s careful and thorough evaluation of the transaction over 13 Board meetings where the Board weighted the merits of the transaction relative to alternatives. It also describes the Board’s decision to designate two independent directors to have a prominent role in overseeing and leading the transaction process and to work closely with the CEO in negotiating the transaction. The proxy statement then shows those directors in action throughout the negotiations.

The proxy statement describes how the Board negotiated multiple price increases and fully tested the $70 share price by maintaining tension and pressure throughout the process. Nowhere is this clearer than in the description of Thoma Bravo’s last minute attempt to cut the price from $70 to $67.50 after rumors about a transaction had appeared in a Bloomberg article. Dayforce’s CEO told the Thoma Bravo representatives that the Board had been clear that it would not entertain a price cut and that given the run-up in the stock price following the Bloomberg article, Dayforce would need to put out a press release in the morning that it was no longer in discussions with Thoma Bravo unless it agreed to reinstate the $70 price. Later that evening, Thoma Bravo agreed to proceed at $70. Actions speak louder than words and the strong pushback from Dayforce when Thoma Bravo attempted to cut the price showed that the Board was only willing to engage in a transaction at a price that it believed fairly valued the company.

The proxy statement was favorably cited by multiple sell-side analysts following its publication as well as the proxy advisors and shareholders. It resolved any questions or doubts regarding the integrity of the transaction process. Its detailed discussion of the Board’s reasons and deliberations regarding the Thoma Bravo transaction, including the macroeconomic, market and operational risks facing the Company, laid out a clear narrative for why the Board believed that the transaction was the best alternative for shareholders on a risk-adjusted basis.

• Auctions Are Not Required and Often Not the Best Path. The proxy statement also describes the Board’s evaluation of potential alternative transactions and provides a poignant reminder that an auction process is not a prerequisite for a good process. The proxy statement describes how the Dayforce board of directors, which included several directors with significant private equity and M&A experience concluded that the universe of potential strategic and private equity buyers was limited and explains in detail the basis for that reasoning. While the Board did engage with other parties, including a financial buyer who then provided an indication at a price significantly lower than Thoma Bravo, it did not run a sales process after concluding that the risks of leaks, distraction to the business and importantly losing the “bird in the hand” outweighed the benefits. Both ISS and Glass Lewis found the Board’s views on the landscape of alternative buyers to be credible and determined that there was a sufficient level of price discovery during the sales process and no reason to conclude there would be a better offer if the transaction broke.
• A Large Shareholder May Have Different Interests than the Majority of Shareholders. T. Rowe was Dayforce’s largest shareholder as of the record date with 15.5% ownership, but as evidenced by the overwhelming shareholder support for the transaction at the special meeting, its views were not ultimately shared by other Dayforce shareholders. It is well known that actively managed funds have faced significant competitive pressures from index and other passive strategies. Active managers seeking higher returns generally have a higher risk tolerance and longer investment horizon than most other investors. A sale of the company crystalizes their return and also requires the portfolio managers to reallocate the funds in the portfolio to a new investment. As more companies are choosing to stay private for longer, or to return to the private markets, it limits the pool of potential growth investments for active managers. Glass Lewis noted that T. Rowe’s approach to opposing the transaction suggests that its opposition to the transaction may stem more from a long-term investment preference than a disagreement with the Company’s process or valuation analysis. Glass Lewis also cited the portfolio management-related considerations and idiosyncratic risk tolerance as potential reasons for T. Rowe’s divergent views on the transaction. As a legal matter, the Board of Directors has a duty to the shareholders as a whole and not to a single large and vocal shareholder who may have an outsized risk tolerance and unique business reasons for opposing a transaction that is in the best interest of shareholders as a whole.
• Importance of Winning the Proxy Advisory Firms if There Is Opposition to the Transaction. It is well known that ISS and Glass Lewis can be influential voices in proxy contests, with a number of institutional investors inclined to follow their voting recommendations. As discussed in today’s Wall Street Journal, that influence has subjected the proxy advisory firms to scrutiny from the administration. But currently they have significant influence, particularly when the margin for error is slim. In Dayforce, the percentage of the shareholder base that were ISS and Glass Lewis clients was smaller than normal because of the highly concentrated shareholder base but it was still a large voting block. Moreover, Dayforce and its advisors believed that a recommendation “FOR” the transaction from proxy advisory firms in the face of opposition from T. Rowe, together with a strong analytical report supporting the transaction, would serve as validation for the transaction. In a contested merger, the company has an opportunity to meet with ISS and Glass Lewis a few weeks ahead of the scheduled vote, and advance preparation for those meetings is essential. ISS and Glass Lewis also speak to investors and receive their perspective. Dayforce met with both ISS and Glass Lewis and the ISS report disclosed that it also met with T. Rowe who made a formal presentation against the transaction.

A recommendation from the proxy advisory firms in the face of opposition from a key stockholder, especially a well-known active manager such as T. Rowe, does not come easily. The proxy advisors have recently recommended against several contested mergers, citing deficiencies in the process as well as in the strategic underpinnings of those transactions and often tend to be sympathetic to activist or opposing shareholders. Dayforce, with the support of its advisors, carefully prepared for these meetings with ISS and Glass Lewis and publicly filed an investor presentation setting forth a clear and cogent argument explaining why the Board recommends that shareholders vote in favor of the transaction. The arguments in the Dayforce presentation built off the narratives and themes that had been presented in the proxy statement and included supporting financial analysis and data, which provided a stark contrast to the absence of substantive analysis or arguments from T. Rowe.

Dayforce also had the important advantage of being able to send the company’s lead independent director and Chief Executive Officer to attend the meetings. Both knew the merits of the transaction inside and out and have a deep understanding of the business and industry and were well positioned to address any questions ISS or Glass Lewis might have. The favorable recommendations from both ISS and Glass Lewis reaffirmed the Board’s views of the merits of the transaction and were critically important in establishing positive momentum in advance of the vote. In recommending FOR the transaction, ISS concluded that standalone execution risks were not insignificant, that the market had consistently failed to reward positive financial performance and highlighted the risk to shareholders of non-approval. Glass Lewis also recommended FOR the transaction noting that the Board had undertaken a disciplined and credible process that appropriately weighed the Company’s long-term prospects against the execution and macroeconomic risks inherent in its standalone plan and concluded that the Thoma Bravo all cash offer represented a full and fair outcome for shareholders, providing them with immediate liquidity and certainty of value as compared to a standalone plan that faced market volatility and headwinds.

Dayforce also employed a targeted and effective shareholder engagement strategy. The engagement strategy in a merger context differs from other activism situations given the binary nature of winning and losing, the voting standard and the importance of momentum and projecting confidence that the merger will pass. Expert proxy solicitors and consultants who understand the street can be helpful in designing an effective strategy.

• Effective Legal and Regulatory Tactics Can Be Outcome Determinative. In a merger contest, there are a number of different legal regimes that must be complied with, including the securities laws and applicable regulatory requirements, which may include bank regulations. Understanding and analyzing these requirements should be an important part of any proxy fight. T. Rowe made a crucial mistake by failing to understand the bank regulatory requirements that applied to Dayforce. As a company with a trust bank subsidiary (which acts as trustee for its US payroll trust), direct and indirect ownership and control of Dayforce is subject to the Change in Bank Control Act and the OCC’s implementing regulations. Under these regulations, ownership of 10% or more of Dayforce created a rebuttable presumption of control that requires prior approval of the OCC. OCC regulations provide that the presumption of control can be rebutted based on a number of factors, including limits on certain control-type activities undertaken by the investor and voting any shares in excess of 10% on a “mirror” basis, i.e., in the same proportion as all other shares voted by all other shareholders.

After Dayforce brought these matters to the attention of T. Rowe, it promptly filed a Schedule 13G meaning that it was moving from a controlling investor to a noncontrolling passive investor. The 13G stated that it operated as an amendment to the prior Schedule 13D control filing and that it replaced the 13D in its entirety and that the shares of Dayforce common stock held by T. Rowe are not held with the purpose, or with the effect of, changing or influencing control of Dayforce. As a legal matter this meant that T. Rowe. was effectively rescinding its prior open letter to shareholders, but it provided no public explanation for the change. T. Rowe subsequently confirmed in writing to Dayforce that it intends to comply with OCC guidance. The preliminary vote totals indicate that T. Rowe only voted 10% of the votes outstanding against the merger.

The filing of the 13G by T. Rowe was immediately noticed by investors, many of whom viewed it as T. Rowe giving up the fight. The combination of the positive recommendations from ISS and Glass Lewis and T. Rowe’s movement to passive investor status created significant momentum in favor of the transaction in the critical days leading up to the shareholder vote.

• Intense Focus and Commitment Is Required. A merger proxy contest requires intense focus and commitment from companies and boards at the most senior levels. Every day there are important strategic and tactical decisions that must be made that could potentially be outcome determinative. Dayforce’s Board and management team remained fully engaged throughout the merger contest, and through that engagement were able to demonstrate to shareholders why the Thoma Bravo acquisition clearly represented the value-maximizing choice for the company’s shareholders.