Roseland, NJ, United States (4E) – Automatic Data Processing Inc. said on Thursday that it will separate with its dealer services business that is focused on marketing for auto dealers and manufacturers, and make the unit as an independent, publicly traded company.
The move will allow ADP to focus more on its core employer-services business, the company said in a statement.
The separation, which comes at a time that demand for automobiles is growing, would be a tax-free move for shareholders, according to ADP, adding that it expects to gain about $700mn from the proceeds. The company said it would use the money to repurchase shares.
The dealer services unit comprises 16 percent of the company’s total revenue in the most recent quarter, according to the firm’s fiscal second-quarter earnings report released in February.
ADP Chief Executive Carlos Rodriguez said the dealer services business continues to be attractive because of its long-term growth opportunities, but the transaction will benefit ADP’s shareholders as it allows each management team to focus more on its own business and strategic opportunities.
ADP offers services that include payroll management, employee-benefits administration and human-resources task outsourcing. The company’s core businesses have shown improved results in recent periods.