CDK Global Inc., the Hoffman Estates, Ill.-based provider of information technology to auto dealers, is meeting with private equity firms to gauge their interest in buying the company, people with knowledge of the matter said.
Bloomberg reported that the activist-targeted company, spun off from Automatic Data Processing Inc. last year, is working with Morgan Stanley to explore a potential sale, said the people, who asked not to be identified because the information is private.
The company and several buyout firms have spoken with banks to determine if financing a deal that size is possible. At that amount, it may be too large for any individual firm to acquire, two people said.
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. A spokeswoman for CDK declined to comment, as did a spokeswoman for Morgan Stanley.
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.
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