Onyx fields buyout bid from CDC

Hong Kong software commpany CDC made an unsolicited buyout bid for CRM maker Onyx, offering up to $50M for a majority stake.

Two years after successfully acquiring midmarket CRM (customer relationship management) software maker Pivotal through a deal that started as an unsolicited bid, CDC Software is taking a run at another CRM vendor, Onyx Software.

CDC Corp., a Hong Kong company that has used acquisitions to assemble a global portfolio of enterprise applications, said Wednesday it wants to meet with Onyx's management to discuss a takeover. CDC intends to offer up to US$50 million in exchange for a majority of Onyx's common stock, it said.

CDC fired off a press release criticizing what it cast as Onyx's reluctance to formally consider its offer. "We have been working directly and through intermediaries to commence a one-on-one dialogue for several months and have been frustrated with our inability to liaise directly with Onyx's management and board," CDC's acting chief executive officer, Steven Chan, said in a written statement.

Onyx, based in Bellevue, Washington, answered back that it received CDC's unsolicited proposal on Dec. 6 and had scheduled a meeting to discuss the bid. Onyx said its board will evaluate the offer, but it offered no timeline on how soon a decision would be announced.

Onyx is one of a dwindling number of independent CRM vendors targeting the market's middle, including customers with annual revenue up to around US$1 billion. Like many of its rivals, 11-year-old Onyx has struggled for profitability in a difficult sales climate. Its revenue has steadily declined through the last five years, from US$121.3 million in 2000 to US$57.6 million in the year ended Dec. 31, 2004. Onyx has posted a net loss for each of those years, though at US$2.8 million, 2004's was the company's smallest recent annual loss.

Two years ago, Onyx was one of three vendors seeking to acquire its rival Pivotal, which eventually chose to accept CDC's bid. Pivotal initially agreed to be taken over by one of its investors, Oak Investment Partners. After that deal was announced, Onyx leapt in with an unsolicited stock-swap offer for Pivotal, which Pivotal rejected. Soon after, CDC launched its own unsolicited bid. Pivotal initially spurned the offer in favor of continuing its planned acquisition by Oak, but after batting terms back and forth with CDC, Pivotal eventually switched allegiances and accepted CDC's offer.

Independent CRM makers have proven attractive acquisition targets. CDC, which does business worldwide but focuses on products localized for Asia-Pacific markets, added Pivotal's sales, marketing and service applications to its collection of back-office software. In September, SSA Global Technologies acquired CRM maker Epiphany in a deal valued at around US$329 million. Meanwhile, Oracle is working to close its US$5.9 billion buyout of Siebel Systems, expected to be completed early next year.

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