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.
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 International Capital Advisors Inc||5,433,700||3.5%|