Payroll processing firm Ceridian Corp. and activist hedge fund Pershing Square Capital Management have resolved their proxy battle, which remained acrimonious in spite of a shared agreement on the merits of a proposed acquisition.

New York-based Pershing Square agreed to drop its proxy battle—in which it sought to replace the entirety of Ceridian’s board—in exchange for Ceridian’s agreement to add four Pershing Square nominees to the board.

Pershing Square is Ceridian’s largest shareholder with a roughly 15% stake. After initially opposing the $5.2 billion offer for the Minneapolis company from private equity firm Thomas H. Lee Partners and Fidelity National Financial, the hedge fund changed its tune in the wake of the downturn in credit markets.

“We are delighted to have brought this situation to an amicable conclusion, and look forward to the prompt closing of the merger,” Pershing Square founder William Ackman said in a statement. “In the interim, we are confident that our designees to Ceridian's board will serve the company well.”

Kathryn Marinello, president and chief executive of Ceridian, said, "This agreement represents a win for all Ceridian stockholders and allows us to move forward decisively in closing our $36 cash merger with Thomas H. Lee Partners and Fidelity National Financial."

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