Global payroll startup Deel has bid to acquire Australian payroll company PayGroup (ASX: PYG) in a deal worth A$119 million ($82 million). Deel has bid $1 per share, a 174% premium on the company's closing price. The payGroup board of directors has unanimously recommended that shareholders accept the offer, and if approved, the deal will close in October.
Deel was founded in 2018 by CEO Alex Bouaziz, a French Jew who immigrated to Israel, Shuo Wang who lives in the US and Ofer Simon, who is not part of the company. The initial expertise of Deel was helping customers employ and pay freelancers around the world.
Subsequently Deel set up legal entities in 90 countries allowing customers that didn't want to deal with the bureaucracy of setting up overseas branches to employ workers through it.
More recently Deel has expanded into the global payroll sector by which workers are paid in foreign branches foreign companies. These companies do hold a branch abroad but do not want to cope with the task of managing salaries in every country and thus needing to comply with local regulations in every country. This is the field in which PayGroup operates by transferring $11 billion in salary payments annually for 2,800 companies. In this sector, Deel is competing with Israeli company Papaya Global, which raised money last year at a valuation of $3.7 billion.
The acquisition of PayGroup will also raise Deel's profile in the Asia-Pacific region. Deel already has 30 employees in Australia, where it launched operations last year, out of 1,100 employees worldwide. PayGroup, which was founded in Singapore in 2006 has 400 employees in Asia who will join Deel when the acquisition is completed.
Deel completed its most recent financing round at a valuation of $12 billion, US website Axios reported in May> The company raised just $50 million in that round from Emerson Collective, a non-profit group that makes impact investments. Prior to that Deel raised $425 million last October at a company valuation of $5.5 billion. In total Deel has raised $679 million and has annual recurring revenue (ARR) of $100 million.
Published by Globes, Israel business news - en.globes.co.il - on June 23, 2022.
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