1 federal lawsuit against CDK dismissed, but 6 others remain
A lawsuit alleging CDK Global Inc. omitted crucial information related to its pending sale to investment firm Brookfield Business Partners was voluntarily dismissed, but six other federal lawsuits alleging similar behavior against the technology company concession are still ongoing.
The lawsuit, which was voluntarily dismissed by plaintiff Matthew Hopkins on Friday, was filed May 4 in U.S. District Court for the Eastern District of New York. He alleged CDK had filed a solicitation statement with the U.S. Securities and Exchange Commission that omitted “material information regarding the proposed transaction” that made the statement “false and misleading.” Hopkins was seeking to file a new statement and block the acquisition of Brookfield.
The voluntary dismissal came after a federal judge issued a cause order on June 10, noting that the plaintiff “did not identify any concrete harm resulting from the absence of this information, and he only alleged that the mere possibility that failure to provide the information could lead to “possible future injury.”
A lawyer for Hopkins did not immediately respond to Automotive News‘ request for comment.
Six other federal shareholder lawsuits were filed against CDK, the company’s board of directors and Brookfield Business Partners between April 26 and May 5, alleging critical information was omitted from acquisition disclosures, according to a regulatory filing posted on CDK’s investor page in May. Lawsuits generally ask that the offer to purchase be barred or that damages be awarded. Three of the remaining six suits are scheduled for a July 22 status conference, according to a Automotive News review of publicly available Federal Court records.
According to the regulatory filing, CDK also faces two lawsuits in state court regarding the sale to Brookfield, one in the Delaware Court of Chancery and the other in the Circuit Court of Cook County, Ill.
“The outcome of these lawsuits cannot be predicted with certainty. However, the buyer believes that the plaintiffs’ allegations in each of the above complaints are without merit,” the regulatory filing states.
A CDK representative did not respond to Automotive News‘ request for comment.
Hoffman Estates, Ill.-based CDK, a provider of dealership management systems and other automotive retail software, announced in April that it had agreed to be acquired by Brookfield in a an agreement valued at 8.3 billion dollars. Under the agreement, Brookfield will purchase all outstanding shares of CDK, with CDK shareholders receiving $54.87 per share in cash upon closing of the transaction. It is expected to close in the third quarter and CDK shares will no longer be listed on the stock exchange after the transaction is completed.
Lindsay VanHulle contributed to this report.