After a month-long tug-of-war over Pivotal Corp., the midmarket CRM vendor will likely be acquired by CDC Software,...
a subsidiary of Hong Kong-based Chinadotcom.
That's because Oak Investment Partners, Pivotal's first suitor, has declined to increase its all-cash bid of $1.78 per share. In a statement, Oak general partner Fredric Harman said there is "no financial justification for increasing the price."
That left CDC as the lone remaining bidder for Vancouver, British Columbia-based Pivotal. Last week, midmarket rival Onyx Software Corp., Bellevue, Wash., withdrew its stock-swap offer citing a low likelihood that the deal would pass.
"For customers, everything they like about us they continue to get -- products, brand, services and the management team," Pivotal CEO Bo Manning told SearchCRM.com. "What they also get [from CDC] is our ability to invest in our future."
CDC is offering Pivotal investors either $2 per share in cash or a combination of $1 cash and $1.14 worth of Chinadotcom stock. Pivotal's board is now recommending that shareholders approve the deal.
CDC will loan Pivotal the money to cover a $1.5 million penalty it will incur for failing to complete the Oak deal. On Oct. 8, Pivotal agreed to be acquired by Oak and then merged with e-service software firm Talisma Inc.
CDC has said that Pivotal's CRM product line would complement its existing ERP, supply chain management, human resources and payroll applications. CDC recently took a controlling stake in supply chain vendor Industri Matematik International and acquired financial performance management and BI software maker Executive Suite. Its buyout of ERP specialist Ross Systems Inc. is still pending.
CDC plans to keep Pivotal's current management team and operate the company as a subsidiary.
Pivotal is promising new investments in research and development, as well as a restart of its acquisitions program. It will also increase technical support staff by 40%. Pivotal has two releases -- Pivotal 5.1 and 5.2 -- planned for 2004, and Manning said a major product announcement is in the works for the second half of the year.
Kelly Ferguson, analyst with Sterling, Va.-based Current Analysis, doesn't expect much immediate impact on Pivotal customers. She said CDC's challenge is making Pivotal fit with its manufacturing-intensive holdings.
"[CDC] will have to work to make this a long-term viable strategy so the Pivotal brand in the CRM market is reestablished," she said.
Pivotal's shareholders are scheduled to vote on the CDC deal in January. The acquisition is also subject to regulatory approval.