Cox Automotive acquires Dealertrack for $4 bn

16 Jun 2015


US vehicle marketing services and software provider Cox Automotive Inc yesterday agreed to buy Dealertrack Technologies Inc, a provider of web-based software services for automotive retail industry, for approximately $4 billion, aiming to expand its global footprint by offering complementary services.

Cox Automotive, owner of the Autotrader online automobile market and Kelley Blue Book car valuation service, has offered $63.25 per share of Dealertrack representing a 59-per cent premium to the share's closing price of $39.85 on Friday in New York.

Further to the merger news, shares in Dealertrack jumped 58 per cent to close at $62.98 yesterday in New York.

Cox Automotive is a subsidiary of the $17-billion Cox Enterprises Inc, an Atlanta-based privately-held media group.

New York-based Dealertrack is a software solutions provider for automotive retail industry including dealers, lenders, vehicle manufacturers, third party retailers, agents and aftermarket providers. It operates online credit application networks in the US and Canada which links more than 20,000 dealers with over 1,500 lenders.

The company provides solutions for dealer management, inventory, sales and F&I, digital marketing and registration and titling solutions. Its 2014 revenue was $854 million and has around 3,900 employees.

The combination of Cox Automotive and Dealertrack will create a broader suite of open solutions that deliver greater value to consumers, dealers, lenders, manufacturers and the overall automotive industry, Cox said in a statement.

Cox Automotive President Sandy Schwartz said: ''This is a great investment in our customers and in the auto industry.''

''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,'' Schwartz added.

Dealertrack Mark chairman and chief executive officer O'Neil commented:  ''I am confident that with Cox Automotive, we will fully unlock the potential of our combined brands and teams in the service of our clients.

The all-cash deal has been unanimously approved by the board of Dealertrack and has been recommended to its shareholders.

The transaction is subject to tendering of majority of outstanding Dealertrack shares and customary closing conditions.

Dealertrack's broad solution set for dealers is an excellent complement to Cox Automotive's vehicle remarketing services and digital markets and software solutions that serve the wider automotive ecosystem, the statement said.

The combination is expected to better serve customers across global markets through each company's respective international footprint.

The purchase is fully financed and will be funded through an existing bank facility, a new $1.85-billion term loan arranged by Citigroup Global Markets Inc and a $750-million equity investment from BDT Capital Partners.

BDT & Company and Citigroup Global Markets are serving as financial advisors to Cox on the deal, while Dealertrack is advised by Evercore.

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