A takeover with a small premium would make it the largest leveraged buyout this year, topping Carlyle Group’s $8 billion deal for Symantec Corp.’s Veritas, announced Tuesday. CDK jumped as much as 13 percent in late trading to $55 a share, after closing at $48.54 in New York.
A spokeswoman for Hoffman Estates, Illinois-based CDK declined to comment, as did a spokeswoman for Morgan Stanley.
Auto Dealers
CDK provides technology to more than 26,000 automobile and heavy-equipment dealers worldwide. The company may be attractive to private equity because of its strong recurring cash flows and the opportunity to substantially cut costs following its recent spinoff, two people said.
It quickly attracted activists Sachem Head Capital Management and Elliott Management Corp. among its biggest shareholders within its first year of public trading. CDK’s second-biggest investor, hedge fund Fir Tree Inc., has also filed as an activist holder since December.
Sachem Head is the largest shareholder, having acquired about 9.8 percent of the company’s stock and options in October 2014. Sachem Head is a hedge fund founded by Scott Ferguson in 2012 after he left activist Bill Ackman’s Pershing Square Capital Management LP.
Elliott, the hedge fund run by billionaire Paul Singer, disclosed a 7.6 percent activist stake in CDK in May.