Pivotal Mulls Buyout Bids As Onyx Pulls Out of Race
After months of being courted by many CRM suitors, Pivotal is set to decide in the next week which company will make the best partner.
A new bidder and Onyx's withdrawal from the race have led Pivotal's Special Committee of the Board of Directors to reschedule its extraordinary meeting of shareholders until December 8, a week later than originally slated. Is likely that at the meeting, the decision will be made about which acquisition bid Pivotal shareholders will accept.
Pivotal's original merger plan was to accept an offer from Oak Investment partners, valued at about $47 million. The deal would combine Pivotal's business with that of Talisma.
A month later rival midmarket player Onyx made an unsolicited all-stock proposal to acquire Pivotal. That proposal was immediately rejected, but Onyx continued its hostile bid. Onyx withdrew it today.
Company officials claim they believe their proposal, valued at nearly $54 million), to acquire Pivotal was superior to all public offers, but withdrew it given the low probability that the offer will be accepted.
"It is unfortunate that Pivotal denied their shareholders the opportunity to pursue the Onyx acquisition proposal that many industry observers saw as a superior offer for shareholders and good for the industry," Brent Frei, Onyx's CEO, says.
On Monday Pivotal announced it had received a firm offer from Chinadotcom Corp.'s software unit, CDC Software Corp. CDC offered Pivotal investors either $2 a share in cash, or $2.14 per share in a combination of $1 cash and $1.14 in shares of Chinadotcom Corp. The deal values Pivotal at $53 million or $57 million, depending on which bid investors accept
While the Special Committee of the Board of Directors of Pivotal has deemed CDC's offer a superior transaction compared with the agreement offered by Oak Investment Partners and Talisma, Pivotal is prohibited from accepting the CDC offer until Oak and Talisma have a chance to amend their offer. The deadline for those modifications is Thursday, Dec. 4.
Onyx may be out of the race to acquire Pivotal, but the company isn't waiting around to see the results before making a move. It announced today a program to migrate Pivotal customers to Onyx. The program enables customers to trade their existing Pivotal licenses for licenses of Onyx Enterprise CRM 4.5.
Denis Pombriant, vice president and managing director of CRM for the Aberdeen Group, says that Onyx was smart to withdraw its bid.
"I'm not even sure what the synergy would be other than gaining rival customers and there are a lot cheaper ways to do that, like migration programs," he says.
Still, Pombriant says that it's not clear that Pivotal customers are eager to abandon ship. Most are likely to wait and see which company acquires Pivotal and what path will be offered to existing users, he says.
Onyx officials are betting the uncertainty will work in its favor. "With the uncertainty surrounding Pivotal's product direction, we believe Pivotal customers will embrace this opportunity to advance their CRM deployments, and we have designed a program to make the transition financially feasible and as painless as possible," Ben Kiker, Onyx Software chief marketing officer, said in a statement.