CDK Global Inc. plans to join its privately held competitors in the dealership management system market this year, perhaps giving the company more flexibility to pursue longer-term growth strategies than public shareholders want to tolerate.
The decision to take CDK off the Nasdaq exchange by selling to global investment firm Brookfield Business Partners — in a deal valued at $8.3 billion — will accelerate the company's growth strategy around creating a seamless vehicle-purchasing experience for consumers, COO Joe Tautges told Automotive News.
"We've done fine as a public company, and we've done a great job over the last several years really improving the core business," Tautges said Thursday. "We saw a great opportunity to create value for [shareholders] and really align with a buyer here who is a very value-added, reputable private equity owner. And it just levels the playing field, quite frankly."
It's too early to know how the ownership change will play out for CDK, as the Hoffman Estates, Ill., company expands beyond its core DMS business into such areas as digital retailing, insurance technology and data insights. It's also updating its internal technology and processes. Brookfield's planned acquisition likely won't have an immediate effect on CDK's dealership customers — it counted 9,181 automotive DMS customer sites as of Dec. 31, although automotive customers using its products in North America number about 12,000 — but it could generate more interest in shorter-term DMS contracts given the change ahead, some said.
CDK CEO Brian Krzanich said the company “will operate independently as a part of Brookfield” in a letter to employees Thursday that was shared in a regulatory filing.