Blackstone, Hellman & Friedman Said Among Firms Looking at CDK

Three of the world’s leading buyout firms are among those looking at CDK Global Inc.’s books, people with knowledge of the matter said.

Blackstone Group, Hellman & Friedman and Permira have been examining CDK’s financial information as the company’s adviser, Morgan Stanley, gauges interest in the provider of information technology to auto dealers, said the people, who asked not to be identified because the information is private. The size of the deal and the challenges facing the activist-targeted company may make completing a deal difficult, the people said, and the firms may decide against making an offer.

CDK Global had a market value of about $7.8 billion as of Tuesday’s market close. A takeover offer including even a small premium would be the largest leveraged buyout this year, surpassing Carlyle Group’s $8 billion agreement to buy Symantec Corp.’s Veritas unit announced this week.

Representatives for Blackstone and Hellman & Friedman declined to comment, while spokeswomen for Permira, Morgan Stanley and Hoffman Estates, Illinois-based CDK didn’t immediately respond to e-mail requests for comment.

The company, spun off from Automatic Data Processing Inc. last year, is working with Morgan Stanley to explore a potential sale, people familiar with the matter said Tuesday.

CDK provides technology to more than 26,000 automobile and heavy-equipment dealers worldwide. The company generates more than $2 billion in revenue annually, according to its website.

It could be attractive to private equity because of its strong recurring cash flows and the opportunity to substantially cut costs following its recent spinoff, two people said Tuesday. CDK quickly attracted activists Sachem Head Capital Management and Elliott Management Corp. among its biggest shareholders within its first year of public trading.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE