CDK Global Inc. announced that it has agreed to be bought by Brookfield Business Partners in a $8.3 billion deal that will take the publicly traded dealership software company private.
The Hoffman Estates, Illinois-based developer of dealership management systems announced Thursday that Brookfield will acquire all of CDK’s outstanding shares for $54.87 per share in cash when the transaction closes in the third quarter.
The offer would represent a 30% premium to CDK’s closing share price on Feb. 18, the company’s last full trading day before market chatter about a potential sale began. CDK shares increased 0.7 percent to $48.99 on Wednesday and were up another 11% in Thursday premarket trading.
CDK’s shares will cease to be publicly traded upon closing.
“This deal is an exciting next step for CDK since it provides assurance of value to our shareholders while also providing a considerable premium. Additionally, it enables CDK to carry out our long-term vision of connecting our industry at all levels and fostering an open and collaborative future “Brian Krzanich, CEO of CDK, said in a statement. “Over several months, in collaboration with our outside consultants, CDK’s board of directors carefully assessed a range of strategic and financial alternatives and found that this deal is better to all other viable choices.”
Brookfield Business Partners is a division of Brookfield Asset Management’s private equity group.
“Brookfield understands the distinct value our products add to over 15,000 retail locations across North America and shares our ambition of revolutionising the future of automotive retail,” Krzanich stated. “We are excited about the opportunity to hone our focus on elevating the dealer and consumer experiences associated with selling, buying, and owning a vehicle.”
CDK has expanded its dealership software offerings beyond its core DMS business, which had 9,181 automotive customer sites as of Dec. 31. CDK acquired digital retailer Roadster for $360 million in June. Additionally, CDK acquired Salty Dot Inc., an insurance technology company that enables consumers to purchase auto insurance concurrently with the purchase of a vehicle.
CDK stated that it is advised financially by Morgan Stanley & Co. and legally by Paul, Weiss, Rifkind, Wharton & Garrison. Davis Polk & Wardwell is Brookfield Business Partners’ legal counsel.