Deals & People June 1, 2007

Ceridian to Go Private in Acquisition

Human resources outsourcer Ceridian Corp., under pressure from an activist hedge fund, agreed to be bought by private equity firm Thomas H. Lee Partners and Fidelity National Financial Inc.
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Ceridian said in a statement that it had conducted a “comprehensive review process” in which it evaluated a “number of strategic alternatives available” including options related to Comdata.
Ceridian had been battling with Pershing Square Capital Management, a hedge fund and major shareholder, which wanted the company to spin off its Comdata division and replace its board. Last month the firm announced that it fired the President of its Comdata division on allegations that he held unauthorized meetings and disclosed confidential information to Pershing over a possible Comdata spinoff.
Minneapolis-based Ceridian’s main human resources outsourcing division offers payroll, benefits administration, and other services to companies. Comdata offers payment processing and is an issuer of credit cards and debit cards. Its serves 25 million employees and 110,000 companies in 38 countries worldwide, including a majority of the Fortune 500. Ceridian’s Comdata division is a major payment processor and issuer of credit, debit and stored value cards, primarily for the trucking and retail industries in the U.S.
Last year, the Newport Group agreed to buy a major part of Ceridian’s Retirement Plan Services recordkeeping and administration business.
As part of the deal, Ceridian shareholders will get $36 in cash, about 17% more than the stock’s closing price on February 12th of this year, just before the company announced it was pursuing strategic alternatives to maximize shareholders’ value.
The deal is subject to shareholder and regulatory approval.
Compliance June 1, 2007

Mid-Year Amendments to 401(k) Safe Harbor Plans Allowed

The Internal Revenue Service has issued guidance sanctioning mid-year changes to 401(k) safe harbor plans regarding new rules for Roth deferrals and hardship withdrawals.
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In announcement 2007-59, the IRS said “a plan will not fail to satisfy the requirements to be a § 401(k) safe harbor plan merely because of mid-year changes to implement a qualified Roth contribution program (as defined in § 402A) or the hardship withdrawals described in part III of Notice 2007-7.”
The IRS said the announcement was issued to address employer concerns about adding provisions during a plan year to their § 401(k) safe harbor plans in order to take advantage of recently effective changes to these rules under the Pension Protection Act of 2006 (PPA) when the pre-year safe harbor notice required from sponsors does not include information about the added provisions.
The PPA made the ability to implement a qualified Roth 401(k) contribution permanent and expanded hardship rules to allow for the distributions to cover qualified expenses for a primary beneficiary of a participant’s account – which may not be a spouse or dependent.
In the announcement the IRS also requested comments regarding whether additional guidance is needed with respect to mid-year changes to a § 401(k) safe harbor plans for the Income Tax Regulations (relating to mid-year amendments to become a safe harbor plan using non-elective contributions) and § 1.401(k)-3(g) (relating to mid-year amendments to suspend or reduce safe harbor matching contributions).
Written comments should be submitted by September 17, 2007 to CC:PA:LPD:DRU (Announcement 2007-59), Room 5203, Internal Revenue Service, POB 7604 Ben Franklin Station, Washington, D.C. 20044.
Comments may also be submitted via the Internet at notice.comments@irscounsel.treas.gov with the subject line: Announcement 2007-59.

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