CDC Corp. Seeks Purchase Dialogue with Onyx

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CDC Corp. said yesterday that it approached Onyx Software Corp. about a strategic transaction in an effort to build a market leader in enterprise software.


CDC, a subsidiary of Hong Kong-based Chinadotcom, proposed to offer $50 million for a majority of Onyx stock. Onyx, Bellevue, WA, would remain a public company. The offer would be a double-digit premium over Onyx's average trading price.


CDC said it tried to meet directly with Onyx management to discuss this proposal but was unsuccessful. In a statement yesterday, Onyx said it would consider this unsolicited proposal as it would any opportunity.


"Onyx received CDC's unsolicited proposal on Dec. 6, and a meeting had been scheduled to discuss this proposal," the statement said. "Onyx remains committed to gather all information necessary in order for Onyx's board to determine the best interests of Onyx shareholders."


Onyx said that CDC's interest is unsurprising, because in the past year the company has executed a growth strategy evidenced by strong double-digit growth in license revenue through the first three quarters of 2005, improvements in operating results, recent "buy" ratings announced by Zacks Investment Research and Roth Capital, and the addition of many brand-name customers.


CDC offers software for midsized enterprises. About 3,500 customers worldwide use its products, including Pivotal CRM, its customer relationship management software. Onyx offers CRM software, serving 1,300 customers in industries including financial services, healthcare, contact center, high tech and local government.


In November 2003, CDC and Onyx made competing bids for Pivotal Corp. after Pivotal had entered into a merger agreement with Talisma Corp. that was sponsored by Oak Investment Partners. Though CDC prevailed by acquiring Pivotal in February 2004, at the time Onyx had stated it expected the synergies of a Pivotal/Onyx merger to be accretive to shareholders.


Analysts had commented at the time that a Pivotal/Onyx merger would benefit customers and shareholders in several ways by establishing the second-largest pure-play CRM vendor behind Siebel (now within the Oracle fold). It also would let employees and shareholders participate in the possible upside of a publicly traded stock.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters
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