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CDK Global Inc (CDK): Elliott Associates Sends Letter to Board & Outlines Plans for Company

In a recent 13D filing with the US Securities and Exchange Commission, Paul Singer‘s Elliott Associates disclosed a letter sent to the board of directors of CDK Global Inc (NASDAQ:CDK), in which it presented its plan regarding the company’s operations. Elliott currently has exposure to 8.6% of CDK’s Global common stock, holding 8.11 million shares, which represent 5.2% of the stock and derivative agreements which represent 3.4% of the stock.

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Elliott considers that CDK Global Inc (NASDAQ:CDK) can improve its EBITDA margin to 42% in 2018 from the current margin of 24%, which would yield a stock price of $81 per share within 14 months.

“CDK has a uniquely attractive business, despite being spun out of ADP with an operational framework and capital structure thatare not optimized for a market-leading vertical software business,” the letter stated.

Elliott considers that CDK Global Inc (NASDAQ:CDK) has not pursued the optimization of its operations and capital structure and the company has “not yet taken any meaningful steps to pursue an optimization of its business operations and capital structure.”

The investor urged CDK Global Inc (NASDAQ:CDK) to implement plans to increase shareholder value, unless the board is interested in exploring the sale of the company.

You can access the original SEC filing and the full text of the letter by clicking here.

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Elliott Associates 2,676,300 5,433,700 2,676,300 5,433,700 2,676,300 1.7%
Elliott International 5,433,700 5,433,700 5,433,700 3.5%
Elliott International Capital Advisors Inc 5,433,700 3.5%

Page 1 of 8 – SEC Filing

(Rule 13d-101)
RULE 13d-2(a)
(Amendment No. 1)*
CDK Global, Inc.
(Name of Issuer)
Common stock, $0.01 par value
(Title of Class of Securities)
12508E 10 1
(CUSIP Number)
Stephen M. Schultz, Esq.
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue, New York, New York 10176
(212) 986-6000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 4, 2016
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box.  ☐
Note.  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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