Item 1.01. Entry into a Material Definitive Agreement.
On November 27, 2020, CDK Global, Inc. (the "Company") entered into a Share Sale
and Purchase Agreement (the "SPA") by and among the Company and, solely for the
limited purposes set forth therein, certain of its subsidiaries, CDK Global
Holdings (UK) Limited, a private company limited by shares incorporated in
England and Wales with registered number 09347879 (the "Target"), and Concorde
Bidco Limited, a private limited company registered in England and Wales with
registered number 13025706 (the "Buyer"), pursuant to which the Buyer has agreed
to purchase all of the Company's CDK International business segment (the
"Business"). The Buyer is an affiliate of private equity firm Francisco
The SPA provides that the Buyer will purchase from the Company all of the issued
share capital of the Target for an all-cash price of $1.45 billion, subject to
customary adjustments (together with the other transactions contemplated by the
SPA, the "Transaction"). The Transaction is expected to close in the third
quarter of the Company's fiscal year 2021.
Consummation of the Transaction is subject to customary closing conditions,
including: (i) receipt of customary regulatory approvals, (ii) the completion of
the required works council consultation processes, (iii) the completion of
certain pre-Transaction reorganization and restructuring, and (iv) as to each of
the Company and Buyer, the material accuracy of the other party's
representations and warranties and the other party's compliance with its
covenants and agreements contained in the SPA in all material respects.
The parties have made customary representations and warranties and have agreed
to customary covenants in the SPA. In addition, the parties have agreed to
mutual non-competition and non-solicitation arrangements, subject to customary
The SPA contains certain termination rights for the Company and the Buyer,
including (subject to certain limitations) the right to terminate the SPA if the
Transaction is not consummated by May 31, 2021 (the "Termination Date"), which
may be extended by either the Company or the Buyer for a period of 60 days if
all of the conditions to the closing of the Transaction have been satisfied or
waived other than those conditions relating to certain regulatory matters.
Under the SPA, the Buyer must pay the Company a termination fee of $70 million
if the SPA is terminated because the Termination Date has passed, due to
Buyer's breach or due to a governmental authority restraining the closing and at
the time of termination there are any antitrust approvals that have not been
obtained, or if the SPA is terminated by the Company because the Termination
Date has passed or for the Buyer's breach, or if the Buyer terminates at a time
when it has breached its obligation to close.
In connection with the execution of the SPA, certain funds affiliated with
Francisco Partners provided the Buyer with an equity commitment letter to fund,
subject to the conditions set forth therein, the entire purchase price at the
closing of the Transaction. The Company is a third party beneficiary to the
Buyer's equity commitments pursuant to the terms and conditions of the equity
commitment letter and entitled to specifically enforce the same. In connection
with the execution of the SPA, certain funds affiliated with Francisco Partners
provided the Company with a limited guarantee of the payment of any termination
fee as described above. The foregoing descriptions of the SPA and the
Transaction do not purport to be complete and are subject to, and qualified in
their entirety by reference to the full text of the SPA, which will be filed as
an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ending December 31, 2020.
Item 2.05. Costs Associated with Exit or Disposal Activities.
In connection with the sale of the Business as described under Item 1.01 above,
the Company expects to incur costs of approximately $35 million for outside
services which will primarily consist of investment banking, accounting and
legal services. The Company expects to incur the majority of these costs in
fiscal 2021, all of which will result in cash expenditures. The Company may
incur additional costs associated with the sale of the Business as the foregoing
costs are estimates and subject to change. The Company anticipates providing
more detailed disclosures regarding the Transaction in its Quarterly Report on
Form 10-Q for the fiscal quarter ending December 31, 2020.
Item 7.01. Regulation FD Disclosure.
On November 30, the Company issued a press release announcing the entry into a
definitive agreement to divest its CDK International business segment and a
presentation regarding such divestiture. A copy of the press release and
presentation are furnished as Exhibits 99.1 and 99.2 hereto.
The information contained in this Item 7.01 of this Current Report on Form 8-K,
as well as Exhibit 99.1 and 99.2, shall not be deemed "filed" for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise be subject to the liabilities of that section. It may only
be incorporated by reference in another filing under the Exchange Act or
Securities Act of 1933, as amended, if it is expressly incorporated by specific
reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit Number Description of Exhibit
99.1 Press Release issued by CDK Global, Inc. on November 30, 2020
99.2 Presentation issued by CDK Global, Inc. on November 30, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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