Owner of Kelley Blue Book and Autotrader to Buy Dealertrack for $4 Billion
Cox Automotive, a provider of digital marketing and e-commerce services for the automotive industry, said on Monday that it would buy Dealertrack Technologies for $4 billion in cash.
The deal is expected to allow the combined companies to provide a broad range of software solutions for the automotive industry, including car buyers, vehicle manufacturers and loan providers.
“This is a great investment in our customers and in the auto industry,” Sandy Schwartz, the Cox Automotive president, said in a news release. “Integrating our platforms will be a big step forward in our shared vision of providing open, cost-effective and efficient solutions for dealers, lenders, manufacturers and consumers.
Under the deal, Cox will pay $63.25 a share in cash for Dealertrack, a 59 percent premium to Dealertrack’s closing price on Friday.
The transaction is subject to a minimum number of Dealertrack shareholders’ agreeing to sell a majority of shares in the company to Cox Automotive.
Dealertrack, based in Lake Success, N.Y., provides web-based software and services to the automotive industry, including dealers, lenders and vehicle manufacturers. Its products include the industry’s largest online credit application network, Dealertrack said.
Dealertrack’s board is recommending that shareholders accept the offer.
“This provides a significant premium and immediate cash value for Dealertrack stockholders at closing,” Mark F. O’Neil, Dealertrack’s chairman and chief executive, said in a news release.
“After careful and thoughtful analysis, with the assistance of our independent legal and financial advisers, we concluded that this transaction provides our stockholders with the opportunity to tender their shares at a price that recognizes the superior value of Dealertrack’s industry partnerships, solutions, technology, financial management and international industry position.”
The transaction will be financed through existing credit facilities and a new $1.85 billion bank term loan.
Cox Automotive, based in Atlanta, provides digital marketing and software for consumers, auto dealers and manufacturers. Its properties include Autotrader.com and Kelley Blue Book. It is a unit of Cox Enterprises and employs nearly 24,000 people worldwide.
BDT & Company and Citigroup and the law firm Wachtell, Lipton, Rosen & Katz advised Cox Automotive, while Dealertrack was advised by Evercore and the law firm O’Melveny & Myers.