Brookfield Business Partners has agreed to acquire CDK Global as the firm looks to boost its influence in the automotive industry, one of the sectors that's been hit hardest by US inflation.
Brookfield will pay nearly $55 a share for CDK—representing a 30% premium to the unaffected closing price of CDK stock on Feb. 18 and giving the Illinois-based company an enterprise value of $8.3 billion. CDK is a provider of retail technology and SaaS solutions that aim to help auto dealers and manufacturers drive efficiency and profitability.
Over the past few years, inventory, supply chain and inflation issues surrounding the auto industry have exposed fault lines in the dealership channel and made the sector ripe for disruption in a number of ways, according to PitchBook mobility analyst Jonathan Geurkink.
A number of automakers are looking at ways to sell directly to customers, similar to Tesla's sales model. Dealers will need to respond and enhance their value-add to the overall sales process. CDK, with its SaaS solutions, looks to arm dealers in that fight, Geurkink added.
Inflation has continued to ravage the new and used car markets. Over the 12 months ended in February 2022, the price index for used cars and trucks climbed over 41%, while the index for new vehicles climbed over 12%, according to the US Department of Labor.
Read more: PitchBook's Q4 2021 Mobility Tech Report
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This article originally appeared on PitchBook News