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MarketScreener Homepage  >  Equities  >  Nasdaq  >  CDK Global, Inc.    CDK

CDK GLOBAL, INC.

(CDK)
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CDK GLOBAL, INC. : Entry into a Material Definitive Agreement, Costs Associated with Exit or Disposal Activities, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K)

11/30/2020 | 08:32am EST

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 Partners.

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 exceptions.

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.

(d) 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
                 document)

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Financials (USD)
Sales 2021 1 852 M - -
Net income 2021 220 M - -
Net Debt 2021 2 187 M - -
P/E ratio 2021 29,0x
Yield 2021 1,16%
Capitalization 6 291 M 6 291 M -
EV / Sales 2021 4,58x
EV / Sales 2022 4,20x
Nbr of Employees 9 000
Free-Float 75,5%
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Mean consensus BUY
Number of Analysts 6
Average target price 61,00 $
Last Close Price 51,70 $
Spread / Highest target 39,3%
Spread / Average Target 18,0%
Spread / Lowest Target 6,38%
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Managers and Directors
NameTitle
Brian M. Krzanich President, Chief Executive Officer & Director
Leslie A. Brun Non-Executive Chairman
Joseph A. Tautges Chief Operating & Financial Officer
Mahesh Shah Chief Product & Technology Officer, Executive VP
Kirsten E. Garen Chief Information Officer
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