Brookfield to Acquire CDK Global in $8.3B deal

BROOKFIELD NEWS, April 07, 2022 – Brookfield Business Partners (NYSE: BBUC, BBU; TSX: BBUC, BBU.UN), together with institutional partners (collectively “Brookfield”) today announced an agreement to acquire CDK Global Inc. (NASDAQ: CDK) (“CDK Global” or the “Company”) for $54.87 per share in a transaction valued at approximately $8.3 billion.

With annual revenue of $1.7 billion, CDK Global is a leading provider of technology services and software solutions that help automotive dealers and manufacturers run their businesses more efficiently. The Company’s best-in-class dealer management software plays a critical role in connecting every aspect of a dealership’s operations and providing solutions to help these customers grow their businesses.

“CDK Global is a high-quality and highly cash generative technology services and software business with a leading market position and strong fundamentals,” commented Doug Bayerd, Managing Director, Brookfield Business Partners. “We are excited to grow our technology footprint with the acquisition of CDK Global, and we look forward to leveraging our operating capabilities to build on the Company’s track record of providing best-in-class customer service and innovation.”

Investment Highlights

• Strong market leadership position. CDK Global is the North American leader in providing mission-critical enterprise resource planning solutions and software for automotive dealerships, serving over 15,000 retail locations.
  
• Durable business fundamentals. The Company’s subscription-based software model, recurring contracted revenues and low ongoing capital requirements underpin its track record of high margins and strong cash flow generation.
  
• Stable industry outlook. Dealerships play a critical role as an efficient distribution and service channel across the entire automotive value chain. CDK Global has strong relationships with customers that operate multiple sites, which positions the Company well to benefit from accelerating consolidation across the dealership industry.
  
• Operational value creation potential. We have identified meaningful opportunities to enhance the Company’s services and productivity as a means to improve the value proposition to CDK Global’s customers and grow margins and cash flows.

Funding

Brookfield’s investment will be funded with $3.5 billion of equity, of which Brookfield Business Partners expects to invest approximately $500 million. The balance is expected to be funded from institutional partners.

Brookfield Business Partners intends to fund its portion of the investment with a new $500 million commitment from Brookfield Asset Management to subscribe for 6% perpetual preferred equity securities of Brookfield Business Partners. Upon issuance, these new preferred securities would be redeemable at par, at the option of Brookfield Asset Management, to the extent Brookfield Business Partners completes asset sales or equity issuances. Brookfield Asset Management has the ability to waive its redemption option.

Transaction Process

The transaction was approved by the CDK Global Board of Directors.

Closing of the transaction is subject to customary closing conditions, including a majority of the stockholders of CDK Global tendering their shares into the tender offer conducted in connection with the transaction and regulatory approval. Closing is expected in the third quarter of 2022.

Advisors

Financing will be led by a syndicate of banks including Credit Suisse, Goldman Sachs, BMO Capital Markets, Barclays, Deutsche Bank Securities, RBC Capital Markets, TD Securities, Wells Fargo and Bank of America. Davis Polk & Wardwell LLP is acting as legal advisor to Brookfield.

Brookfield Business Partners is a global business services and industrials company focused on owning and operating high-quality businesses that provide essential products and services and benefit from a strong competitive position. Investors have flexibility to invest in our company either through Brookfield Business Corporation (NYSE, TSX: BBUC), a corporation, or Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN), a limited partnership. For more information, please visit https://bbu.brookfield.com.

Brookfield Business Partners is the flagship listed vehicle of Brookfield Asset Management’s Private Equity Group. Brookfield Asset Management is a leading global alternative asset manager with approximately $690 billion of assets under management. More information is available at www.brookfield.com.

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