Members of the board of directors said yesterday that Onyx Software Corp. is rejecting a $50 million offer from CDC Corp. for a majority stake in Onyx.
A committee made up expressly to consider CDC's offer rejected it unanimously, according to Onyx. In a release issued yesterday, Onyx cited the poor financial performance of CDC's software division, a "poor track record of delivering shareholder value," the decreased valuation of CDC acquisitions -- Ross Systems and Pivotal Corp. -- and that the proposal would be "highly dilutive to Onyx shareholders."
CDC, a subsidiary of Chinadotcom, a Chinese enterprise software vendor, offered $50 million for a majority stake in Onyx, which would remain a public company. It currently has a small stake in Onyx.
CDC first proposed its bid Dec. 6 and executives from the two companies met Dec. 30 to discuss the proposal. CDC took its plan to the press two days before that meeting, saying it was having trouble communicating with Onyx executives and had little faith the offer was being taken seriously. That revelation came as a shock to Onyx, which said there had simply been scheduling difficulties around the holidays.
However, in a conference call today, CDC's acting CEO Steven Chan said that the Dec. 30 consisted only of a 30-minute phone call with the Onyx CEO.
CDC executives called for the move, claiming that "bigger is better" in the rapidly consolidating CRM market and noted the complementary customer bases. Onyx's strong customer base in government, healthcare and insurance would complement CDC's home building, asset management and manufacturing, CDC said.
The two companies have a brief history, both bidding for midmarket CRM provider Pivotal in 2003. CDC ultimately prevailed; paying $2 per share for Pivotal stock after Onyx withdrew its bid. After that deal, CDC and Onyx discussed a combined company, but nothing came of it until CDC revisited the plan in November, according to Chan.
Chan added that CDC's offer "is not set in stone" and that he and Rick Marquardt CDC's president would be traveling the U.S. to discuss their offer and with analysts and Onyx shareholders.
Onyx reiterated yesterday that the company is not for sale and now considers the matter closed.
"Our responsibility is to evaluate proposals. We are rejecting this proposal," said Janice Anderson, CEO of Onyx. "If we were seeking a sale of the company it would be different. At this point, unless there's a specific unsolicited proposal, we've already made our decision. There is no other proposal on the table. You can't assess what you don't have."
Anderson said that, while Onyx is not seeking to sell the company or make an acquisition and hasn't done due diligence on CDC, she did not see a lot of synergies between the two companies.
Chan expressed disappointment with Onyx's response and note of finality.
"We are further disappointed with the process Onyx used to value our proposal," Chan said. "Our representatives had a single 30-minute phone call with Onyx's CEO; no other board member attended that call. CDC has been unable to schedule any discussion with any member of Onyx's management or board."
Anderson responded that she is the chairman of the board and Onyx management is well aware of CDC's offer.