Brookfield enters formal agreement to acquire CDK Global in multi-billion dollar deal

Automotive Ventures CEO Steve Greenfield recaps this breaking news bulletin

Together with institutional partners, Brookfield Business Partners (collectively “Brookfield”) have entered into a formal agreement to purchase CDK Global, a leading automotive retail technology firm, for a total enterprise value of $8.3 billion.

Brookfield will launch a tender offer to buy all of CDK’s outstanding shares under the provisions of the merger agreement. CDK’s Board of Directors unanimously accepted the deal, proposing that CDK stockholders tender their shares in the offer. Upon completing the agreement, CDK stockholders will receive $54.87 per share in cash, representing a 30% premium over the unaltered closing price of CDK shares on Feb. 18, 2022, the last full trading day before market speculation about a prospective sale of the firm.

When the deal is complete, CDK will no longer be a publicly-traded company. 

“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,” said Brian Krzanich, President and CEO of CDK Global.

“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. 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. I am grateful for our team’s incredible work in providing an integrated experience —from sourcing to retail sale, and beyond.”

CDK Global reported $1.67 billion in revenue for the 2021 financial year with an annual net income of $1.03 billion, nearly a four-fold increase in net over 2020’s figures. That appears to factor in proceeds of the sale of CDK’s international business.

CDK in the midst of strong growth

CDK Global has been in a growth period over the past several years, positioning as an end-to-end “retail technology and software as a service (SaaS)” provider for the automotive industry. In March 2021, the company sold its international business to Francisco Partners in a deal worth $1.45 billion. That cash was intended to focus on building North American operations.

In September 2018, CDK acquired ELEAD1ONE, a growing CRM system for auto dealers. Then in June 2021, they acquired Roadster, a leading digital retailing provider, for $360 million. In September 2021, CDK Global also announced a definitive agreement to acquire Salty Dot, Inc., a mobile-first insurance solution that operates in all 50 states.

About Brookfield

Brookfield Business Partners is the “flagship listed vehicle” of the parent company, Brookfield Asset Management’s Private Equity Group. Their goal is to acquire and operate businesses offering essential products and services. With roughly $690 billion in assets under management, Brookfield targets returns for their investors between 15 and 20% annually. They’re known for strong plays in the M&A market. 

Brookfield recently acquired La Trobe Financial, an Australian non-bank lender, for $1.1 billion and Scientific Games’ lottery business for more than $6 billion. The company also acquired DexKo Global for $3.4 billion in July as well as Modulaire Group, a modular building, and infrastructure company for $5 billion. 

This deal is expected to be completed in the third quarter of 2022.

Last Updated: 3:37 p.m. April 7, 2022

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