By Nivedita Balu and Eva Mathews
(Reuters) - Brookfield Business Partners is buying CDK Global Inc for $6.41 billion in cash, taking private the last major publicly traded provider of software to auto dealers and manufacturers.
The purchase announced on Thursday gives the private equity firm a strong foothold in an industry estimated to reach $29.3 billion by 2026, thanks to the rising software demands of companies from electric-vehicle startups to established auto manufacturers.
CDK Global has over the past several years come under pressure to sell itself and has been an activist target. It has offloaded low-margin businesses and instead tried to build out its digital businesses by buying online platforms such as Salty Dot, Roadster and Square Root.
"There was basically a mismatch between the goals of the investor base and the company itself. As a private company, they'll be able to continue this transition and grow their digital presence," Oppenheimer analyst Ian Zaffino said.
The deal with Brookfield Business Partners, a unit of Brookfield Asset Management, will offer CDK Global investors $54.87 for each share held, a premium of 12% to the company's closing price on Wednesday.
CDK Global said the deal price was also 30% more than where its shares traded on Feb. 18, when talks about the deal were first reported. The enterprise value of the deal is $8.3 billion and it is expected to close in the third quarter of 2022.
CDK Global shares, which fell 19% last year, rose more than 11% in early trading on Thursday.
Brookfield said the deal was a bet on CDK Global's subscription-based software model and that it expects the company to benefit from a rise in consolidation across the dealership industry.
(Reporting by Nivedita Balu and Eva Mathews in Bengaluru; Editing by Aditya Soni)