A lawsuit alleging CDK Global Inc. omitted crucial information related to its pending sale to investment firm Brookfield Business Partners has been voluntarily dismissed, but six other federal lawsuits alleging similar behavior against the dealership technology company are still active.
The lawsuit, which was voluntarily dismissed by plaintiff Matthew Hopkins on Friday, was filed May 4 in U.S. District Court for the Eastern District of New York. It alleged that CDK filed a solicitation statement with the U.S. Securities and Exchange Commission that left out "material information with respect to the Proposed Transaction" that made the statement "false and misleading." Hopkins was seeking the filing of a new statement and to block Brookfield's acquisition.
The voluntary dismissal came after a federal judge issued an order to show cause on June 10, noting that the plaintiff "has not identified any concrete harm resulting from the lack of this information, and he has not alleged more than the mere possibility that the lack of information could result in 'possible future injury.' "
A lawyer for Hopkins did not immediately respond to Automotive News' request for comment.
Six other federal shareholder lawsuits were filed against CDK, the company's board of directors and Brookfield Business Partners between April 26 and May 5, alleging that critical information was left out of acquisition disclosures, according to a regulatory filing released on CDK's investors page in May. The lawsuits are generally asking that the offer to purchase be enjoined or seeking damages to be awarded. Three of the six remaining suits are scheduled for a status conference July 22, according to an Automotive News review of publicly available federal court records.
According to the regulatory filing, CDK is also facing two lawsuits filed in state courts related to the sale to Brookfield, one that was filed in the Delaware Court of Chancery and the other in Circuit Court of Cook County, Ill.
"The outcome of these lawsuits cannot be predicted with certainty. However, Purchaser believes that the plaintiffs' allegations in each of the foregoing complaints are without merit," the regulatory filing stated.
A representative for CDK did not respond to Automotive News' request for comment.
Hoffman Estates, Ill.-based CDK, a provider of dealership management systems and other automotive retail software, in April said it agreed to be acquired by Brookfield in a deal valued at $8.3 billion. Under the deal, Brookfield will purchase all of CDK's outstanding shares, with CDK shareholders receiving $54.87 per share in cash when the transaction closes. It is expected to close in the third quarter, and CDK's stock no longer will be publicly traded after the transaction is finalized.
Lindsay VanHulle contributed to this report.