ADP to Acquire The Cobalt Group for $400M

The Cobalt Group, a Seattle-based automotive digital marketing company, said today it has agreed to be acquired by Automatic Data Processing (NASDAQ: ADP) for approximately $400 million in cash. The deal is subject to regulatory review and is expected to close in the next four to six weeks, according to ADP.

Roseland, NJ-based ADP said it expects the acquisition to “slightly” boost profits in the first year, and to continue to generate positive earnings to the company in coming years. In a parallel statement, the 15-year-old Cobalt said that the acquisition will position ADP to “transform how vehicles are marketed, sold and managed” by bringing a more streamlined experience to its consumers, a larger global marketing network to its manufacturers, and a supportive sales force for its dealers.

ADP, which has been in business for 60 years, generates about $9 billion a year from 570,000 clients who use its human resources, payroll, and benefits outsourcing products and services. Cobalt helps automobile dealers and manufacturers improve their marketing and advertising online. Cobalt says its service has been adopted by almost half of the auto dealers in the U.S.

“For over 15 years, Cobalt’s mission has been to enable OEMs and dealers to work together to use the Internet to influence prospects as they move from product awareness to purchase and provide more timely services to existing owners. By combining our offerings with ADP, we will be even better positioned to carry this mission forward,” Cobalt chairman and chief executive John Holt said in a statement.

“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,” APD CEO Gary C. Butler said in a statement. “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.”

Spokespeople for both Cobalt and ADP did not immediately respond to a request for comment. However, Holt did tell TechFlash that the company will be staying in Seattle, will continue under its own brand name, and is actively recruiting.

ADP is holding a conference call on Monday at 4 pm Eastern/1 pm Pacific to discuss the transaction with analysts and investors. To listen at that time, click here.

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