Cox Automotive Inc, the owner of Autotrader platform and Kelley Blue Book car valuation service, said it would buy Dealertrack Technologies Inc in a deal valued at $4 billion.
The $63.25 per share offer represents a 59% premium to Dealertrack’s Friday closing price of $39.85. Dealertrack makes software for the automotive retail industry.
The deal has an equity value of $3.44 billion, according to Thomson Reuters calculations. The companies said they expect the deal to close in the third quarter of 2015.
“Integrating our platforms will be a big step forward in our shared vision of providing open, cost-effective and efficient solutions for dealers, lenders, manufacturers and consumers,” Cox President Sandy Schwartz said in a statement.
Warren Buffett’s Berkshire Hathaway recently agreed to buy Van Tuyl Group, the fifth-largest owner of U.S. auto dealerships, saying he sees great opportunity in the space.
Privately held Cox, the automotive arm of media company Cox Enterprises, said it would fund the acquisition through a new $1.85 billion loan arranged by Citigroup Global Markets, a $750 million equity investment from BDT Capital Partners and existing credit facility.
BDT & Co and Citigroup Global Markets are financial advisers to Cox Automotive while Evercore was advising Lake Success, New York-based Dealertrack.