CDK Global : to Sell International Business Segment
11/30/2020 | 09:09am EST
CDK International Divestiture
November 30, 2020
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CDK will sell 100% of the CDK International segment to Francisco Partners
Francisco Partners will acquire the CDK International business segment, which includes operations in Europe, Middle East, South Africa and Asia
CDK's will retain the North America business segment, which includes the auto and adjacency businesses of the United States and Canada, as well as certain India shared service operations
Purchase price of $1.45 billion represents approximately 15 times LTM CDKI Adj. EBITDA(1) including estimated stand-alone costs
Transaction is subject to customary closing conditions and regulatory approval, and is expected to close during Q3 FY 2021
Beginning with Q2 FY 2021, the CDKI segment will be presented as discontinued operations in
CDK's financial statements
The transaction is expected to generate after-tax cash proceeds of approximately $1.3 billion(2) for CDK.
LTM Adjusted EBITDA includes estimated expenses for the standalone business for the last twelve months ended September 30, 2020
Includes gross purchase price minus cash taxes and is based on estimates and subject to revision
Focuses resources and management attention on core North America businesses
Provides significant capital to strengthen balance sheet and increase flexibility for capital allocation strategy
Limited impact of separating businesses given lack of full operational and technology integration
Sell non-core asset at attractive valuation
Simplifies operating model by focusing on North America tech stack and operational structure
Use of Proceeds
Transaction proceeds significantly strengthen CDK's financial position and provide increased flexibility for investments
Near-term,will repay debt to strengthen the balance sheet while we review capital deployment strategies
Using a returns-based approach, expect to redeploy capital in support of growth in our core North America business, along with consideration for other capital deployment initiatives, including shareholder returns or further de-leveraging
Plan to update our capital allocation strategy at the release of Q2 FY 2021 earnings results
Impact on CDK Continuing Operations
Starting in Q2 FY 2021, CDK will report the CDKI segment as discontinued operations and prior years will be reclassified as such
CDK will update its FY 2021 guidance to reflect continuing operations in the coming weeks once the preparation of the discontinued operations reporting is complete
CDK Global Inc. published this content on 30 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2020 14:08:07 UTC