CDK Global Inc. said it agreed to be acquired by investment firm Brookfield Business Partners in a deal valued at $8.3 billion that would take the publicly traded dealership software giant private.
The dealership management system provider based in Hoffman Estates, Ill., said Thursday that Brookfield will purchase all of CDK’s outstanding shares, with CDK shareholders receiving $54.87 per share in cash when the transaction closes, expected in the third quarter.
The price would reflect a 30 percent premium to CDK’s closing share price on Feb. 18, which the company said was the last full day of trading before market speculation began about a possible sale. CDK shares rose 11.3 percent to $54.51 in midday trading.
Upon closing, CDK’s stock no longer will be publicly traded.
“This transaction is an exciting next step for CDK that provides our shareholders with both certainty of value and a meaningful premium. It also allows CDK to continue executing our long-term strategy to connect our industry at every level and create an open and collaborative future,” CDK CEO Brian Krzanich said in a statement. “In consultation with our outside advisors, CDK’s board of directors carefully evaluated a range of strategic and financial alternatives over several months and determined that this transaction is superior to all other available alternatives.”
Brookfield Business Partners is a unit of global alternative asset management firm Brookfield Asset Management’s private equity group.
“Brookfield recognizes the unique value our products bring to more than 15,000 retail locations in North America and shares our vision of transforming the future of automotive retail,” Krzanich said. “We are excited about the opportunity to further sharpen our focus on elevating the dealer and consumer experience when selling, buying or owning a vehicle.”
CDK has expanded beyond its core DMS business, which had 9,181 automotive customer sites as of Dec. 31, into other dealership software products. In June, CDK acquired digital retailing provider Roadster for $360 million. Also last year, CDK acquired Salty Dot Inc., an insurance technology company that allows consumers to buy auto insurance at the same time they buy a vehicle.
CDK said Morgan Stanley & Co. is its financial adviser and Paul, Weiss, Rifkind, Wharton & Garrison is its legal adviser. Davis Polk & Wardwell is legal adviser to Brookfield Business Partners.