Onyx Offers To Acquire Pivotal
Onyx today offered to acquire Pivotal in a strategic move to sabotage the planned Talisma and Pivotal merger and to bolster its own mid-market dominance. The Onyx offer comes a little more than a month after Oak Investment Partners, Talisma's majority shareholder, offered to buy Pivotal, and subesequently merge the companies.
The Onyx proposal, which was submitted by letter to the Pivotal board of directors this morning, outlined a deal for a stock-for-stock transaction valued at approximately $2.25 per Pivotal common share, totaling nearly $60 million. This represents a 26 percent premium over the Talisma cash offer, valued at $1.78 per share. The Talisma cash offer would render Pivotal a private company, whereas the Onyx offer would not.
The Onyx offer, which excludes Talisma, slipped in before the shareholder meeting set for November 18, 2003, during which shareholders were expected to vote on the acceptance of the Talisma offer.
The merger would create the second largest pure-play CRM vendor behind Siebel. If approved, the deal would yield a combined entity with 2,600 customers and combined annual revenue of $110 million, besting other pure-play CRM vendors in size such as E.piphany, Chordiant, and KANA.
As for the fate of the existing 1,600 Pivotal customers under Onyx's management, Onyx assures it would provide support for Pivotal products initially. "We would provide ongoing support for Pivotal's product line for the [near] future. We are going to do nothing that would tarnish or disrupt Pivotal's reputation. Over time you would see us rationalize both products onto a single product line," says Ben Kiker senior vice president and chief marketing officer at Onyx.
Pivotal customers stand to fare better if Onyx acquires Pivotal than if Talisma does, says Benjamin Holtz, chief executive officer of Green Beacon, a CRM mid-market consultant, servicing both Onyx and Talisma solutions. "In my opinion it would be a lot easier to go from Pivotal to Onyx than from Pivotal to Talisma. Onyx has a more flexible user interface, and you can make more changes [such as customization for specific vertical applications]. "If I'm a Pivotal customer today, I'd be happier with Onyx [more] than a Talisma/Pivotal scenario."
Additionally Pivotal customers can migrate to Onyx's more advanced Internet platform. "Pivotal has a small group of Web-based customers. Most are using Pivotal's client-server product, because Pivotal's Web product doesn't have the same amount of features as its client-server product. Onyx has a fourth generation--Internet product and has more features on its Internet platform than its client/server product," Kiker says. That's why he adds, "Pivotal has a lot of customers that are anxious to move to the Internet platform and we need to quickly communicate to them what our Internet platform looks like and help them migrate."
Are there situations in which Pivotal customers would benefit more if Talisma acquires Pivotal? "If I'm looking for a pure CRM play for my entire company, Onyx is the choice. If I'm looking for a good customer service play with some sales functionality and other neat functionality, then Talisma is my choice," Holtz says.
Holtz maintains that the Pivotal and Onyx merger would stand a better chance of survival in an increasingly competitive market. "At a combined 2,600 customers, the Onyx and Pivotal entity could fend off Siebel, Salesforce.com, and in a few years, Microsoft in the mid-market," Holtz says.
A Pivotal spokeswoman could not comment on the Onyx offer, but said Pivotal is trying to bring its board together to review the Onyx proposal. No one at Talisma was available for comment at press time.