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Pivotal Sale: Going, Going...
The identity of the ultimate new owner remains up in the air as Onyx earlier this month made a richer stock-only offer to acquire Pivotal and CDC Software last week announced its own bid for the company.
Posted Nov 25, 2003
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Pivotal Corp., the Vancouver-based developer of midmarket CRM software, is almost assuredly going to be sold on December 3, for roughly $50 million. However, the identity of the ultimate new owner remains up in the air. In early October Pivotal announced an offer from Oak Investment Partners, backers of the lesser-known Talisma, to acquire Pivotal for $1.78 per share. At the time Pivotal chairman Norm Francis endorsed the deal to shareholders. The combined company was to be named Pivotal, with current Pivotal President and CEO Bo Manning continuing in those roles, and Talisma CEO Dan Vetras becoming COO. Things got interesting on the way to the altar. In early November Onyx, a company often considered Pivotal's main competitor, made a richer stock-only offer to acquire Pivotal. Pivotal's board declined the offer. Last week CDC Software announced its own bid for Pivotal. A subsidiary of Chinadotcom, CDC Software has been buying up enterprise software vendors with the goal of repurposing and remarketing them in Asia. The deal offered a slightly higher payoff for Pivotal shareholders, but came with conditions the board felt were unworkable, and the Pivotal board and CDC traded posturing press releases over the details. Just one day after branding the CDC offer "increasingly uncertain," Pivotal announced an adjournment of its annual shareholders' meeting to December 3, during which a merger partner may be formally announced. "We are working diligently to help CDC get to a place where [it] can come up with a firm proposal for Pivotal shareholders, as opposed to a highly conditional proposal," says Divesh Sisodraker, Pivotal CFO. After numerous statements "reaffirming" the deal with Oak, it seems that the tide may be turning. "There may be a deal that can be done with CDC that's superior from a Pivotal shareholder perspective. CDC has until Sunday at midnight to come up with that deal," Sisodraker says. Yankee Group CRM program manager Sheryl Kingstone says that although the fragmented nature of the midmarket makes Pivotal's sale a necessity, the Talisma/Pivotal proposal is reminiscent of dot com-era thinking. "It's nothing more than the venture capitalists leveraging both investments and trying to compete. It hasn't been proven to work."
Kingstone also says that the Pivotal customer base would have been better served by an Onyx acquisition. "I don't think [Pivotal] seriously looked at it. I think a lot of it is politics--who would run the combined company?" Pivotal's Sisodraker says he believes the outcome for current customers will be the same regardless of the final decision. "Both companies, Oak as well as CDC, are looking to maintain and enhance the Pivotal product line."
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