CDK Global Acquisition Poised for Approval as Top Proxy Firms Give Green Light

It's a really interesting time for CDK Global, the well-known automotive retail technology company, as it gears up for a crucial shareholder vote on its acquisition by affiliates of Francisco Partners. What’s particularly noteworthy is that two of the most influential independent proxy advisory firms out there, Institutional Shareholder Services (ISS) and Glass Lewis & Co., have both thrown their weight behind the proposed deal.

For shareholders, this endorsement is a pretty big deal, you know? It lends a significant layer of credibility and guidance ahead of the special meeting scheduled for June 22, 2022. The agreement itself is quite substantial, valuing CDK at an impressive $54.50 per share in cash, which translates to roughly $8.3 billion in total. This all-cash offer is precisely what these advisory giants have scrutinized.

Let's dive a bit deeper into what ISS had to say in its report on June 9, 2022. They pointed out that the $54.50 cash consideration represents a robust 30.1% premium over CDK's closing share price back on April 7, 2022. That date, by the way, was the last trading day before any whispers of a potential transaction started circulating. Furthermore, ISS highlighted that it’s also a healthy 25.5% premium to the 30-day volume-weighted average price (VWAP) ending on that same date. In essence, they felt the offer provides shareholders with immediate and certain value, and at a 'healthy premium' to boot.

ISS didn't just look at the numbers, though. They also commended the CDK board for what appeared to be a thorough and 'robust strategic review process.' Crucially, this review included a 'go-shop' period, designed specifically to fish for any superior offers. And, as it turns out, none emerged. Their conclusion was clear: with an all-cash offer providing certain value at a strong premium, and no better bids popping up after a diligent search, supporting this transaction simply makes sense.

What's more, Glass Lewis, another titan in the advisory world, echoed this sentiment. In their own June 9, 2022 report, they drew attention to the fact that CDK’s board of directors had unanimously approved the transaction. This wasn't a snap decision either; it came after what they described as a 'comprehensive review of strategic alternatives.' Like ISS, Glass Lewis also found the proposed cash consideration to be an 'attractive premium' that offers shareholders certain value for their holdings.

Glass Lewis underscored the diligent efforts of the Special Committee and the Board, emphasizing that the proposed transaction was the outcome of a 'thorough strategic review process' and that same 'robust 'go-shop' period' we just discussed. Considering all these factors, they too believe that shareholder support for the proposed transaction is entirely warranted. It really speaks volumes when both these independent firms arrive at the same conclusion.

Ultimately, the message is consistent across the board, if you will. CDK Global’s Board of Directors has also unanimously recommended that shareholders vote 'FOR' the arrangement agreement at the upcoming special meeting. It seems that everyone involved, from the company's own leadership to external, independent experts, sees this acquisition by Francisco Partners as a positive and beneficial step forward for CDK Global shareholders. The vote on June 22nd will surely mark a significant new chapter.