ROSELAND (dpa-AFX) - Payroll processor Automatic Data Processing Inc.'s (ADP) board has approved a plan to separate the Dealer Services business into an independent publicly traded company via. a tax-free spin-off of 100% of Dealer Services to ADP shareholders. Dealer Services is a global provider of retail and digital marketing solutions to automotive retailers and manufacturers.
According to ADP's Chief Executive, 'The Dealer Services business remains attractive in terms of long-term growth opportunities; however, we believe this transaction will benefit ADP's shareholders by allowing each management team to better focus on its own business and strategic opportunities. ADP's ongoing efforts and commitment will be focused on executing against our global HCM strategy. As we deliver against this commitment, our goal remains driving consistent and sustainable profitable revenue growth and return of capital to shareholders through dividends and share repurchases.'
With respect to the spin-off, ADP anticipates to receive in a tax-free manner at least $700 million, which proceeds ADP intends to return to its shareholders via. share buybacks upon the completion of spin-off. Following the spin-off, ADP plans to maintain its current $0.48 quarterly cash dividend per share. Over the medium to long term, ADP plans to return to its pre-separation target dividend payout ratio of 55% - 60%.
This separation is likely to complete in the early part of the fourth calendar quarter of 2014.
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