ADP to Acquire Cobalt
ROSELAND, N.J. — Automatic Data Processing's chief executive officer announced Friday that his company has entered into a definitive agreement to purchase Cobalt for about $400 million in cash. The deal, which is subject to normal regulatory review, is expected to close within four to six weeks.
"I am pleased to announce this transaction. Acquisitions that complement our core businesses are a key part of ADP's five-point strategic growth program and the primary focus of our capital allocation strategy," explained Gary Butler, president and CEO.
"Cobalt is the leading provider of digital marketing solutions to automotive manufacturers and dealers in North America. This transaction aligns with ADP Dealer Services' global layered applications strategy to increase ‘share of wallet' beyond its core dealer management system offering. We believe the timing of this transaction is optimal as online advertising spend is expected to continue to outpace that of traditional channels in the U.S.," he continued.
Cobalt is a privately held company headquartered in Seattle, Wash. ADP management indicated that it expects the transaction to be slightly accretive in the first year, with continued positive earnings contributions in subsequent quarters.
According to management, ADP's capital allocation strategy also includes returning excess cash to shareholders through share repurchases and dividends. For fiscal-year ended June 30, ADP repurchased about $18.2 million in shares for more than $765 million. Additionally, the company paid almost $675 million in dividends to its shareholders. Nearly 29 million shares remain available for purchase under the current board of directors' authorization.
ADP has about $9 billion in revenues and about 570,000 clients. The company offers a wide range of human resource, payroll, tax and benefits administration solutions from a single source. ADP is also a leading provider of integrated computing solutions for auto, truck, motorcycle, marine and recreational dealers throughout the world, according to the company.
For more information on the company, visit www.ADP.com.