Two years after outbidding Onyx in a play for Pivotal, the CDC Corp. is now seeking to bring its rival into the fold.
CDC, unable to arrange a meeting with executives from Bellevue, Wash.-based Onyx Software Corp. turned to the press on Wednesday, revealing that it is interested in majority ownership of the company. According to the announcement, CDC, a subsidiary of Hong Kong-based Chinadotcom Corp., would offer $50 million in return for a majority of Onyx stock. Onyx would remain a public company. The offer would be for a double-digit premium over Onyx's average trading price.
Although, CDC has attempted to meet directly with Onyx management to discuss this proposal, it has been unsuccessful.
"We had dialogues six months ago and more intensive talks in the last three months," said Rick Marquardt, president of CDC. "More recently, we've had a meeting scheduled, a meeting canceled, a meeting scheduled, a meeting canceled. We believe there's a window of opportunity and we want to take advantage of an opportunity. We thought we would open up and let shareholders understand we were sincere in our efforts."
That's news to Onyx.
"It surprised us out of the blue," said Todd Chambers, chief marketing officer at Onyx. "They requested some dates we couldn't accommodate. Trying to get available dates for executives around the holidays was a challenge."
According to Chambers, an unsolicited offer from CDC came in Dec. 6, Onyx made several attempts to schedule a meeting and both sides have arrived at a date that is "imminent."
The two companies are no strangers to one another. At the end of 2003, both companies along with Oak Investment Partners put in bids for the Pivotal Software Corp. with Onyx ultimately withdrawing from the bidding and CDC prevailing over Oak's bid with an offer of $2 per share. Both Onyx and Pivotal performed strongest among midmarket CRM buyers, but Marquardt said they see less and less of one another in competing deals, running more frequently into companies like Siebel Systems Inc. Marquardt said a combination of the two companies was necessary to compete in a rapidly consolidating marketplace. Siebel is in the midst of being acquired by Oracle Corp. for $5.85 billion.
"When we look at the enterprise application marketplace, size does matter," Marquardt said. "There is some synergy from an overall business."
Onyx's customer base in government, health care and insurance, complements CDC's strengths in home building, asset management and manufacturing, he added. Additionally, Onyx's strength selling into the channel would benefit CDC, while CDC's presence in Asia would open doors for Onyx.
In a release issued late yesterday afternoon, Onyx said it "shall consider this proposal as it would any opportunity that may present itself." According to the release, the company received CDC's proposal Dec. 6 and has scheduled a meeting. Onyx cited double-digit growth in license revenue the last three quarters.
"We're not looking to sell the company," Chambers said. "But as any company would, you look at it and do the due diligence It's a little confusing to us what they're referring to. We are not 'not interested.'"
Onyx stock closed out at $3.95 yesterday, up 5%.