CDK Global

Last updated
CDK Global, Inc.
Company type Private
Nasdaq: DK
IndustrySoftware
Founded2014;10 years ago (2014)
Headquarters Austin, Texas, U.S.
Key people
Brian P. MacDonald (president & CEO) [1] [2]
ProductsSoftware for automotive retail
RevenueIncrease2.svg US$1.67 billion (2021)
Decrease2.svg US$425 million (2021)
Increase2.svg US$1.03 billion (2021)
Total assets Decrease2.svg US$2.71 billion (2021)
Total equity Increase2.svg US$495 million (2021)
Owner Brookfield Business Partners
Number of employees
6,500 (2021)
Website cdkglobal.com
Footnotes /references
[3]

CDK Global Inc. is an American multinational corporation based in Austin, Texas, providing data and technology to the automotive, heavy truck, recreation, and heavy equipment industries. [4] [5]

Contents

The company has 37 locations in 25 countries [6] and its products are sold in over 100 countries, [5] however most of its customers are in the United States. [7] [8] In 2020, the company ranked 911 on the Fortune 1000 list of the largest United States corporations by total revenue. [9]

Products

CDK Global provides integrated information technology and digital marketing to the automotive, heavy truck, recreation, and heavy equipment industries. [7] [2] The company's products help to integrate clients buying processes and include targeted advertising and marketing, as well as products for the sale, financing, insuring, parts supply, repair, and maintenance of vehicles. [7] [4] [10] Competitors include Reynolds and Reynolds, Tekion, and Dealertrack. [11]

History

The company has its origins as the Dealer Services division of Automatic Data Processing (ADP), which was formed in 1973 after ADP acquired National Inventory Control System, Portland OR (NICS) and Computer System Inc., Cincinnati, OH (CSI) providing computerized Accounting, Financial Reporting, Sales Analysis, Lease Accounting, Parts Inventory Control, Customer Relations, Management Systems for both Sales and Service, and Payroll Services for automotive dealerships. [12] [13] As ADP Dealer Services, the division was subsequently built up of more than 30 acquisitions completed over the next 41 years. [14]

On October 1, 2014, ADP Dealer Services division was spun-off to form the independent company CDK Global. [15] [16] The CDK in the company's name was inspired from different acquisitions; C from Cobalt Digital Marketing, [17] D from the original ADP Dealer Services business, and K from Kerridge Computer Company, a UK-based dealer management system (DMS) supplier acquired by ADP in 2005. [18] [19]

Notable acquisitions include BZ Results, winner of AutoSuccess magazine's 2005 “Innovative Company of the Year” award, [20] by ADP in 2006. [21]

In May 2017, CDK Global announced its intention to acquire rival DMS supplier Auto/Mate Dealership Systems, [22] but the proposed acquisition was blocked by the Federal Trade Commission in March 2018 on the grounds that it would reduce competition in an already concentrated market. [23] [24]

In 2020, CDK Global announced the sale of its international operations (to be called Keyloop) to Francisco Partners, as an effort to focus more on its North American business. [25] [26]

On April 7, 2022, CDK Global agreed to be acquired by Brookfield Business Partners and institutional partners for a total enterprise value of $8.3 billion. The deal offered CDK investors $54.87 for each share held, representing a 30% premium. [27] [28] Brookfield completed the deal on July 6, 2022. [29] [30]

Antitrust lawsuit

In May 2017, CDK was sued, along with DMS supplier Reynolds and Reynolds, by data integration service provider Authenticom, which alleged that the two companies engaged in anti-competitive conduct and violated antitrust law by conspiring to block third-party access to their data systems in order to create a duopoly. [31] [32] In July 2017, District Judge James Peterson granted a preliminary injunction against CDK and Reynolds and Reynolds, ruling that there was sufficient evidence to find "the existence of a per se illegal horizontal conspiracy" between CDK and Reynolds and Reynolds to divide the data integration market between them and block competitors, and requiring the two companies to "cease blocking Authenticom" from providing "data integration services to dealers who authorize Authenticom to provide this service." [32] [33] In November 2020, CDK settled its lawsuit with Authenticom, agreeing to make a one-time cash payment to Authenticom. [34]

June 2024 ransomware attack

On June 19, 2024, CDK experienced a ransomware attack that took most of its services offline, disrupting thousands of car dealerships across the US and Canada. [35] An Eastern European and Russian hacker group, thought by security researchers to be BlackSuit, claimed responsibility and demanded tens of millions of dollars in ransom. [36] On June 21, CDK paid $25 million in bitcoin to a cryptocurrency account connected with BlackSuit, and on June 23, began the process of restoring services, later advising that the work would not be completed before June 30. [37] [38] By July 4, access for nearly all dealers had been restored. [39]

Shares in CDK's parent company lost over 5.7% value in the wake of the attack, [40] while share prices of large auto dealers Sonic, Group 1 and AutoNation dropped up to 4.4%. [41] JD Power estimated that due to the outage, U.S. retail unit sales in June 2024 would decrease by up to 7.2% from June 2023. [42] At least eight lawsuits alleging negligence were filed against CDK by dealerships whose operations were affected by the outage. [43]

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References

  1. ↑ "Our Leadership | CDK Global". www.cdkglobal.com.
  2. 1 2 "CDK | CDK Global Inc. Company Profile & Executives - WSJ". www.wsj.com.
  3. ↑ "CDK Global Inc. 2021 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission . August 18, 2021.
  4. 1 2 "About | CDK Global". www.cdkglobal.com.
  5. 1 2 "CDK Global Inc". Reuters. June 27, 2024. Archived from the original on April 30, 2022. Retrieved June 27, 2024.
  6. ↑ "Locations". craft.co. Retrieved 2021-04-24.
  7. 1 2 3 "Do Traders Think CDK Global Inc (CDK) Can Keep Climbing Tuesday?". www.investorsobserver.com.
  8. ↑ "CDK Global commands 9.79% market share in Automotive". enlyft.com.
  9. ↑ "CDK Global | 2020 Fortune 500". Fortune.
  10. ↑ "CDK Global Reports Strong Revenue Growth and Margin Expansion for the First Quarter of Fiscal 2017 and Increases Full Year Earnings Outlook | CDK Global Inc". investors.cdkglobal.com.
  11. ↑ Gardner, Greg. "Tekion Sees The Cloud As Key To Streamlining Auto Retailing". Forbes.
  12. ↑ Cars and Trucks January-December 1973: Vol 45 Index. National Automobile Dealers Association. 1974-01-01. p. 5.
  13. ↑ Vendor Profile: A Publication from INPUT's Vendor Analysis Program. Input Reports and Research Archive Project. 1976. p. 611.{{cite book}}: CS1 maint: others (link)
  14. ↑ "CDK Global: A Spin-Off Worth Avoiding". seekingalpha.com. October 18, 2014. Retrieved 2021-04-24.
  15. ↑ "CDK Global Inc - Company Profile and News". Bloomberg.com.
  16. ↑ "EX-99.1". www.sec.gov. Retrieved 2021-09-01.
  17. ↑ "ADP Buying Cobalt Group for $400 Million". PE Hub. 2010-07-12. Retrieved 2021-09-01.
  18. ↑ "ADP Reveals Post-Spin Name of Dealer Services Business". Auto Remarketing. 2014-08-19. Retrieved 2021-09-01.
  19. ↑ "ADP Dealer Services under new name - CDK Global". www.am-online.com.
  20. ↑ Luck, Patrick (December 2005). "AutoSuccess' Innovative Companies of the Year" (PDF). AutoSuccess. Systems Marketing, Inc. pp. 8–10. Archived from the original (PDF) on 2007-11-30. Retrieved 2024-06-29.
  21. ↑ Banks, Cliff (2006-03-17). "ADP Acquires BZ Results". Ward's . Archived from the original on 2022-07-27. Retrieved 2024-06-29.
  22. ↑ Finlay, Steve (2017-05-24). "Automotive Info Tech Giant CDK to Acquire Auto/Mate". Ward's . Archived from the original on 2024-06-27. Retrieved 2024-06-27.
  23. ↑ "FTC Blocks CDK Global's Acquisition of Auto/Mate". F&I and Showroom. 2018-03-20. Archived from the original on 2023-03-29. Retrieved 2024-06-27.
  24. ↑ "FTC Challenges CDK Global, Inc.'s Proposed Acquisition of Competitor Auto/Mate, Inc". Federal Trade Commission. 2018-03-20. Archived from the original on 2023-09-22. Retrieved 2024-06-27.
  25. ↑ "CDK Global completes $1.45 billion sale of international unit". Crain's Chicago Business. March 1, 2021.
  26. ↑ "CDK Global to Sell International Business to Francisco Partners for $1.45 Billion". finance.yahoo.com. 30 November 2020.
  27. ↑ Balu, Nivedita; Mathews, Eva (April 7, 2022). "Brookfield to buy automotive software maker CDK Global for $6.41 bln". Reuters .
  28. ↑ "CDK Global to Be Acquired by Brookfield for $54.87 Per Share in Cash". www.businesswire.com. 2022-04-07. Retrieved 2022-04-07.
  29. ↑ "CDK Completes $8.3 Billion Sale to Brookfield". www.paulweiss.com/. 2022-07-06. Retrieved 2022-08-07.
  30. ↑ "CDK Global completes sale to Brookfield—what does this mean for dealer partners?". www.cbtnews.com/. 2022-07-22. Retrieved 2022-08-07.
  31. ↑ Lutz, Hannah (2017-05-02). "Reynolds, CDK hit by another antitrust lawsuit". Automotive News . Archived from the original on 2022-08-14. Retrieved 2024-06-27.
  32. 1 2 Gnau, Thomas (2017-07-18). "Federal judge rules against Reynolds and Reynolds". Dayton Daily News . Archived from the original on 2022-11-29. Retrieved 2024-06-27.
  33. ↑ Kamal, Tariq (2017-07-18). "Authenticom Granted Preliminary Injunction in CDK, Reynolds Lawsuit". F&I and Showroom. Archived from the original on 2022-05-17. Retrieved 2024-06-27.
  34. ↑ VanHulle, Lindsay (2020-11-09). "CDK settles antitrust lawsuit over data access". Automotive News . Archived from the original on 2020-11-09. Retrieved 2024-06-27.
  35. ↑ Robledo, Anthony; Schulz, Bailey; Lin-Fisher, Betty. "Auto dealer system updates to take 'several days' following CDK hack, ransom demand". USA Today. Retrieved 2024-06-23.
  36. ↑ Visconti, Zachary (2024-06-24). "Dealership system hackers seemingly identified as restorations begin". TESLARATI. Retrieved 2024-06-25.
  37. ↑ "CDK Global begins to restore systems after cyber hack hits thousands of retailers". Reuters. June 23, 2024. Retrieved June 23, 2024.
  38. ↑ "CDK Global says outages to continue through June 30 after supplier hack". Yahoo News. 2024-06-25. Retrieved 2024-06-26.
  39. ↑ Maruf, Ramishah (2024-07-02). "CDK Global says 'substantially all' dealers back online after crippling hack | CNN Business". CNN. Retrieved 2024-07-04.
  40. ↑ "Software company plans to pay tens of millions in ransom to hackers who crippled car dealerships across North America". Fortune. Retrieved 2024-06-25.
  41. ↑ "Car Sellers Warn Investors of Possible Financial Hit From Cyberattack". Bloomberg. Retrieved 2024-06-25.
  42. ↑ Lareau, Jamie (June 27, 2024). "June new vehicle sales expected to take hit from cyberattack on dealer software". Detroit Free Press. Retrieved June 27, 2024.
  43. ↑ "CDK Global faces multiple lawsuits from dealerships crippled by cyberattack". CBS News. 2024-07-03. Retrieved 2024-07-04.
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