Transaction Sharpens CDK’s Strategic Focus on Growth in North America Markets
HOFFMAN ESTATES, Ill., Nov. 30, 2020 (GLOBE NEWSWIRE) -- CDK Global, Inc. (Nasdaq:CDK) (the “Company” or “CDK”), a leading provider of dealer management systems (“DMS”) and integrated information technology solutions to the automotive retailing and adjacent industries, announced today the execution of a definitive agreement to sell its CDK International business segment (“CDKI”) to Francisco Partners for $1.45 billion. The purchase price represents approximately 15 times CDKI’s LTM adjusted EBITDA(1) including expenses for the standalone business. CDK expects the transaction to be completed during the third quarter of its fiscal year 2021, subject to customary closing conditions and regulatory approval.
“I am excited to announce this important milestone for CDK. With this transaction, we can now focus on executing the next phase of our growth journey and spotlight our attention on our North America business,” said Brian Krzanich, CDK president and chief executive officer. “CDK has made significant progress over the last two years in strengthening and expanding our core business to be customer-centric and a leader in technology for our dealers, OEMs and partners and we have seen the positive results of our investment efforts. We are now well positioned to expand our activities and create new revenue streams with even stronger growth prospects.”
“While we believe the International business is a great asset and are very pleased with the compelling valuation, it largely operated independently, with specific technology, sales and operations tailored to the International markets. The sale of this business strengthens our balance sheet and provides significant financial flexibility in support of our goals to drive value and to accelerate growth in our North America business,” said Joe Tautges, CDK chief operating officer and interim chief financial officer. “As our track record indicates, we will use a thoughtful returns-based approach to allocating capital and will provide an update to our planned use of proceeds at the release of our Q2 fiscal 2021 earnings results.”
CDK will use the proceeds of the transaction for general corporate purposes, including the pay down of debt to strengthen the balance sheet.
Based on the execution of this agreement to sell, the CDKI segment will be classified as discontinued operations in the second quarter of fiscal 2021. As a result, the company announced that it is withdrawing its previously provided annual consolidated guidance estimates for fiscal year 2021. CDK will be updating its FY 2021 guidance to reflect continuing operations in the coming weeks once the preparation of the discontinued operations reporting is complete.
Additional information is available in our accompanying presentation, which is available at the CDK Investor Relations website at investors.cdkglobal.com. Further details regarding the definitive sales agreement can be found on Form 8-K filed with the Securities and Exchange Commission on November 30, 2020.
Credit Suisse is serving as financial advisors for the transaction, with Mayer Brown LLP acting as legal advisor.
(1)LTM Adjusted EBITDA includes estimated expenses for the standalone business for the twelve months ended September 30, 2020.
About CDK Global
With $2 billion in revenues, CDK Global (NASDAQ:CDK) is a leading global provider of integrated information technology solutions to the automotive retail and adjacent industries. Focused on enabling end-to-end automotive commerce, CDK Global provides solutions to dealers in more than 100 countries around the world, serving approximately 30,000 retail locations and most automotive manufacturers. CDK solutions automate and integrate all parts of the dealership and buying process, including the acquisition, sale, financing, insuring, parts supply, repair and maintenance of vehicles. Visit cdkglobal.com.
About Francisco Partners
Francisco Partners is a leading global investment firm that specializes in partnering with technology and technology-enabled businesses. Since its launch over 20 years ago, Francisco Partners has raised over $24 billion in committed capital and invested in more than 300 technology companies, making it one of the most active and longstanding investors in the technology industry. The firm invests in opportunities where its deep sectoral knowledge and operational expertise can help companies realize their full potential. For more information on Francisco Partners, please visit franciscopartners.com.
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This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including: statements regarding the proposed transaction; the Company’s business outlook, including the Company’s GAAP and adjusted fiscal 2021 guidance; other plans; objectives; forecasts; goals; beliefs; business strategies; future events; business conditions; results of operations; financial position and business outlook and trends; and other information, may be forward-looking statements. Words such as "might," "will," "may," "could," "should," "estimates," "expects," "continues," "contemplates," "anticipates," "projects," "plans," "potential," "predicts," "intends," "believes," "forecasts," "future," "assumes," and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed, or implied by, these forward-looking statements.
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