The company that controls Autotrader and Kelley Blue Book reached a deal to acquire a major provider of software to auto dealers for $4 billion.
Cox Automotive will acquire Dealertrack (TRAK) in a deal expected to be finalized in the third quarter. The acquisition values Dealertrack shares at $63.25, a 59% premium over Friday's closing price.
The deal is designed to give Cox a stronger foothold in the dealer business, which relies heavily on Dealertrack software to complete financing transactions and handle logistics.
"This is a great investment in our customers and in the auto industry," Cox Automotive President Sandy Schwartz said in a statement. "We have long admired the Dealertrack team and its highly respected brands. 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."
Cox said it would pay cash for Dealertrack, assembling the capital from an existing bank facility, a new Citigroup loan and an equity investment from BDT Capital Partners.
Atlanta-based Cox Automotive brands include Autotrader, Kelley Blue Book and NextGear Capital. The company, a division of Cox Enterprises, has about 24,000 employees in more than 150 locations and counts more than 40,000 dealers among its customers.
Dealertrack provides software to dealers, manufacturers, lenders and other auto industry entities. Its customers include some 20,000 dealers and 1,500 lenders.
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