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CDK Global Directs Focus Toward Automotive

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CDK

CDK Global is divesting its digital marketing business to focus more on its core automotive software operations.

This story by David Muller originally appeared in Automotive News.

The company, in a Form 8-K filed with the Securities and Exchange Commission, said the potential sale includes all assets of its North America advertising segment and portions of its North America retail solutions segment related to mobile advertising and website services.

CDK plans to complete the move within 12 months. Its digital marketing business represented about 19 percent of revenue and 13 percent of pretax earnings in the nine months ended March 31, according to the Form 8-K. The company is working with Allen & Co. to identify potential buyers and evaluate proposals.

Revenue for CDK’s North America advertising segment fell 18 percent in the third quarter ended March 31. CEO Brian Krzanich said in an earnings call that the unit “has continued to be a headwind on total company growth.”

The company’s advertising segment took a hit this year when General Motors told its Chevrolet, Buick and GMC dealers that they would be able to use approved vendors beyond CDK, which had been its exclusive preferred provider and manager of websites.

Krzanich said in a release Thursday that the divestiture decision follows a strategic review.

Starting in the company’s fourth quarter, CDK said it will present its digital marketing business as a discontinued operation.

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