Brookfield Business Partners (NYSE: BBUC, BBU; TSX: BBUC, BBU.UN),
together with institutional partners (collectively “Brookfield”)
today announced an agreement to acquire CDK Global Inc. (NASDAQ:
CDK) (“CDK Global” or the “Company”) for $54.87 per share in a
transaction valued at approximately $8.3 billion.
With annual revenue of $1.7 billion, CDK Global
is a leading provider of technology services and software solutions
that help automotive dealers and manufacturers run their businesses
more efficiently. The Company’s best-in-class dealer management
software plays a critical role in connecting every aspect of a
dealership’s operations and providing solutions to help these
customers grow their businesses.
“CDK Global is a high-quality and highly cash
generative technology services and software business with a leading
market position and strong fundamentals,” commented Doug Bayerd,
Managing Director, Brookfield Business Partners. “We are excited to
grow our technology footprint with the acquisition of CDK Global,
and we look forward to leveraging our operating capabilities to
build on the Company’s track record of providing best-in-class
customer service and innovation.”
Investment Highlights
- Strong market leadership
position. CDK Global is the North American leader in
providing mission-critical enterprise resource planning solutions
and software for automotive dealerships, serving over 15,000 retail
locations.
- Durable business
fundamentals. The Company’s subscription-based software
model, recurring contracted revenues and low ongoing capital
requirements underpin its track record of high margins and strong
cash flow generation.
- Stable industry
outlook. Dealerships play a critical role as an efficient
distribution and service channel across the entire automotive value
chain. CDK Global has strong relationships with customers that
operate multiple sites, which positions the Company well to benefit
from accelerating consolidation across the dealership
industry.
- Operational value creation
potential. We have identified meaningful opportunities to
enhance the Company’s services and productivity as a means to
improve the value proposition to CDK Global’s customers and grow
margins and cash flows.
Funding
Brookfield’s investment will be funded with $3.5
billion of equity, of which Brookfield Business Partners expects to
invest approximately $500 million. The balance is expected to be
funded from institutional partners.
Brookfield Business Partners intends to fund its
portion of the investment with a new $500 million commitment from
Brookfield Asset Management to subscribe for 6% perpetual preferred
equity securities of Brookfield Business Partners. Upon issuance,
these new preferred securities would be redeemable at par, at the
option of Brookfield Asset Management, to the extent Brookfield
Business Partners completes asset sales or equity issuances.
Brookfield Asset Management has the ability to waive its redemption
option.
Transaction Process
The transaction was approved by the CDK Global
Board of Directors.
Closing of the transaction is subject to
customary closing conditions, including a majority of the
stockholders of CDK Global tendering their shares into the tender
offer conducted in connection with the transaction and regulatory
approval. Closing is expected in the third quarter of 2022.
Advisors
Financing will be led by a syndicate of banks
including Credit Suisse, Goldman Sachs, BMO Capital Markets,
Barclays, Deutsche Bank Securities, RBC Capital Markets, TD
Securities, Wells Fargo and Bank of America. Davis Polk &
Wardwell LLP is acting as legal advisor to Brookfield.
Brookfield Business Partners is
a global business services and industrials company focused on
owning and operating high-quality businesses that provide essential
products and services and benefit from a strong competitive
position. Investors have flexibility to invest in our company
either through Brookfield Business Corporation (NYSE, TSX: BBUC), a
corporation, or Brookfield Business Partners L.P. (NYSE: BBU; TSX:
BBU.UN), a limited partnership. For more information, please visit
https://bbu.brookfield.com.
Brookfield Business Partners is the flagship
listed vehicle of Brookfield Asset Management’s Private Equity
Group. Brookfield Asset Management is a leading global alternative
asset manager with approximately $690 billion of assets under
management. More information is available at
www.brookfield.com.
For more information, please contact:
Investor
RelationsAlan FlemingTel: +1 (416) 645 2736Email:
alan.fleming@brookfield.com |
MediaSebastien
BouchardTel: +1 (416) 943-7937Email:
sebastien.bouchard@brookfield.com |
ADDITIONAL INFORMATION AND WHERE TO FIND IT
The tender offer described in this document has
not yet commenced. This communication is for informational purposes
only and is neither an offer to purchase nor a solicitation of an
offer to sell shares of CDK Global nor is it a substitute for any
tender offer materials that Central Merger Sub Inc. (“Merger Sub”),
a subsidiary of Brookfield Business Partners, or CDK Global will
file with the U.S. Securities and Exchange Commission (the “SEC”).
A solicitation and an offer to buy shares of CDK Global will be
made only pursuant to an offer to purchase and related materials
that Merger Sub intends to file with the SEC. At the time the
tender offer is commenced, Merger Sub will file a Tender Offer
Statement on Schedule TO with the SEC, and CDK Global will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC with respect to the tender offer. CDK GLOBAL’S STOCKHOLDERS AND
OTHER INVESTORS ARE URGED TO READ THE TENDER OFFER MATERIALS
(INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL
AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. The Offer to
Purchase, the related Letter of Transmittal and certain other
tender offer documents, as well as the Solicitation/Recommendation
Statement, will be sent to all stockholders of CDK Global at no
expense to them. The Tender Offer Statement and the
Solicitation/Recommendation Statement will be made available for
free at the SEC’s website at www.sec.gov. Free copies of these
materials and certain other offering documents will be available by
directing requests for such materials to the information agent for
the offer, which will be named in the Tender Offer Statement.
Copies of the documents filed with the SEC by CDK Global will be
available under the “Investor Relations” section of CDK Global’s
website at www.cdkglobal.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND
INFORMATION
Note: This news release contains
“forward-looking information” within the meaning of Canadian
provincial securities laws and “forward-looking statements” within
the meaning of applicable Canadian and U.S. securities laws.
Forward-looking statements include statements that are predictive
in nature, depend upon or refer to future events or conditions,
include statements regarding the operations, business, financial
condition, expected financial results, performance, prospects,
opportunities, priorities, targets, goals, ongoing objectives,
strategies and outlook of Brookfield Business Partners, as well as
the outlook for North American and international economies for the
current fiscal year and subsequent periods, and include words such
as “expects,” “anticipates,” “plans,” “believes,” “estimates,”
“seeks,” “intends,” “targets,” “projects,” “forecasts” or negative
versions thereof and other similar expressions, or future or
conditional verbs such as “may,” “will,” “should,” “would” and
“could.”
Although we believe that our anticipated future
results, performance or achievements expressed or implied by the
forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not
place undue reliance on forward-looking statements and information
because they involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, which may
cause the actual results, performance or achievements of Brookfield
Business Partners to differ materially from anticipated future
results, performance or achievement expressed or implied by such
forward-looking statements and information.
Factors that could cause actual results to
differ materially from those contemplated or implied by
forward-looking statements include, but are not limited to: the
impact or unanticipated impact of general economic, political and
market factors in the countries in which we do business; including
as a result of the ongoing novel coronavirus (SARS-CoV-2) pandemic,
including any SARS-CoV-2 variants (collectively, “COVID-19”); the
behavior of financial markets, including fluctuations in interest
and foreign exchange rates; global equity and capital markets and
the availability of equity and debt financing and refinancing
within these markets; strategic actions including dispositions; the
ability to complete and effectively integrate acquisitions into
existing operations and the ability to attain expected benefits;
changes in accounting policies and methods used to report financial
condition (including uncertainties associated with critical
accounting assumptions and estimates); the ability to appropriately
manage human capital; the effect of applying future accounting
changes; business competition; operational and reputational risks;
technological change; changes in government regulation and
legislation within the countries in which we operate; governmental
investigations; litigation; changes in tax laws; ability to collect
amounts owed; catastrophic events, such as earthquakes; hurricanes
and pandemics/epidemics; the possible impact of international
conflicts, wars and related developments including Russia’s
military operation in Ukraine, terrorist acts and cyber terrorism;
and other risks and factors detailed from time to time in our
documents filed with the securities regulators in Canada and the
United States.
In addition, our future results may be impacted
by various government mandated economic restrictions resulting from
the ongoing COVID-19 pandemic and the related global reduction in
commerce and travel and substantial volatility in stock markets
worldwide, which may negatively impact our revenues, affect our
ability to identify and complete future transactions, impact our
liquidity position and result in a decrease of cash flows and
impairment losses and/or revaluations on our investments and
assets, and therefore we may be unable to achieve our expected
returns. See “Risks Associated with the COVID-19 Pandemic” in the
“Risks Factors” section included in our Management’s Discussion and
Analysis of Financial Condition and Results of Operations in our
most recently filed Form 20-F.
We caution that the foregoing list of important
factors that may affect future results is not exhaustive. When
relying on our forward-looking statements and information,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Except as
required by law, Brookfield Business Partners undertakes no
obligation to publicly update or revise any forward-looking
statements or information, whether written or oral, that may be as
a result of new information, future events or otherwise.
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