Automotive industry technology company CDK Global Inc. has agreed to sell its international division to private-equity firm Francisco Partners for $1.45 billion.
The Hoffman Estates, Ill., company provides technology to about 30,000 dealers of autos, heavy trucks, construction and agriculture equipment, powersports and recreational vehicles and marine craft around the world. CDK systems automate and integrate processes from acquiring vehicles from manufacturers to selling, financing and maintaining them.
The company’s international division—which largely serves clients in Europe, the Middle East, Africa and Asia—will become a stand-alone company under Francisco’s ownership. The acquisition is slated to close in the third quarter of CDK’s 2021 fiscal year, which began in July.
The deal price represents about 15 times the business segment’s adjusted earnings before interest, taxes, depreciation and amortization for the 12 months through September, according to a CDK news release.
Petri Oksanen, a Francisco partner, will join the newly independent company’s board of directors after the deal closes.
Francisco has had a busy year. In June it raised nearly $10 billion across three funds to invest in technology companies, including $7.45 billion for its sixth flagship fund, its largest investment pool to date.
The San Francisco firm has been busy buying companies this year as well, many of them carve-outs from large corporations.
In late October, the firm agreed to acquire the MyFitnessPal smartphone app from Under Armour Inc. for $345 million. Just a few days earlier it said it would buy cybersecurity company Forcepoint from Raytheon Technologies Corp.
Following the deal, CDK expects to focus on its North American business. The proceeds of the sale of its international business are earmarked for “general corporate purposes,” including the paying down of debt, according to the release and an investor presentation.
Global light vehicle sales were forecast to fall to 69.6 million units this year, 22% lower than 2019 levels, according to data provider IHS Markit in April. Demand in the segment was expected to slide world-wide because of the coronavirus pandemic.
Source: Wall Street Journal
