As the CRM world turns, episode seven

Some pursuers are persistent indeed. With a tenacity that would inspire a cross-dressing Shakespeare heroine, CDC Software continues to win Onyx Software Corporation. In a conference call to investors, CDC Software executive vice president of strategy pleaded his case to investors, running with the party line that the third and latest buyout offer is a superior deal to both previous CDC offers and the current offer from Made2Manage Software Inc.

Musser emphatically stated that his firm’s US $4.85 per share in cash or US $5 per share in cash and stock from CDC Corporation “trumps” Made2Manage Holdings’ US $4.80 per share offer. With more statistics and flipcharts than H. Ross Perot, Musser demonstrated that the third CDC proposal represents a premium of 4.2 percent over the competing offer, and that the Made2Manage proposal was just under 1 percent better than the first CDC offer. Musser even implied a sword of Damacles over the heads of Onyx, namely the US $4.5 million in break fees and expenses that Onyx will pay when the Made2Manage deal breaks down.

Clearly, Musser’s numbers are correct, but this is not under debate. Clearly, Onyx representatives do not appreciate the approach of unsolicited offers. In March of this year, CDC’s second offer raised the bid to $4.57 a share, or about $80 million, in cash. The response from Onyx was to take on investment banker Piper Jaffray to help evaluate its strategic options. Jaffray spent little time considering the options before realizing that CDC would stop at nothing to get Onyx. The banker’s forecast was simply that selling to M2M was simply the only way to avoid the hostile takeover by CDC. “By accepting the Made2Manage offer,” Musser said, Onyx management “gave up an opportunity to get CDC’s best and final offer.”

We’ll see about that. Musser went on the say that the Onyx board hadn’t shown interest in a bidding war, the natural order of things as Musser sees it. Musser complained that the CDC offer had been rejected out of hand (it was also first submitted unasked for as well…) and that this “raises concerns about the Onyx management team’s objectives.” Apparently playing a bit of tit for tat, Musser stated that “Onyx’ inconsistent public statements reflect a clear desire of Onyx management to mislead the market.”

Gee, just about a week ago Onyx released their stinging retort to the latest CDC offer of June 20. CDC first announced the bid, then gave it up presumably when CDC officials feared that Onyx might actually take it seriously. “Only two days later,” an Onyx spokesperson said, “CDC has abandoned its all cash offer and now purports to offer Onyx shareholders only a combination of cash and stock, demonstrating CDC’s inconsistent statements and unpredictable behavior.” One day later, Onyx continued to show that it was not amused. “[C]oming in the final weeks of a fiscal quarter, combined with CDC’s previous behavior, suggests the possibility that CDC’s announcement is disingenuous and that its true intention is to harm Onyx’s business and enhance CDC’s competitive position in the sales process, rather than engage in serious negotiations…”

Like a spurned wooer with little left to lose, Musser stated that CDC’s third and current offer is superior in value and choice. “We ask Onyx to reconsider its rejection of our proposal and to move quickly to assess alternatives,” stated Musser, making this the first occasion on which some opinion is being asked directly of the Onyx brain trust. Musser stated that CDC is considering a proxy fight for Onyx, which in theory would lend arbitration of final decision to investors. Onyx representatives have since offered a few statistics of their own.

Onyx claims that, under terms of the third CDC agreement, the actual price paid to Onyx shareholders under the deal could be as low as US $4.50 per share and that those returns “would likely take several months longer to complete than the proposed transaction with [M2M] due to the need to file a registration statement with the SEC.” Onyx also claimed the deal shaky because the future of CDC fiscal solvency is “uncertain” Musser today said CDC will continue to go after Onyx “in spite of concerns” because “I have to agree that this has been a very unusual process, but some things are consistent — we continue to have a strong belief in the business combination and a desire in realizing its value,” he said. “We are continuing to simplify the offer and make it more attractive to Onyx shareholders.” CDC Software is a provider of enterprise software applications designed to assist organizations in delivering a superior customer experience.

The CDC Software product suite includes Pivotal CRM, c360 CRM, Microsoft Dynamics CRM platform development tools, Ross enterprise resource planning, Ross supply chain management, IMI warehouse management, order management, Platinum China human resource solutions, and business analytics. CDC Software now boasts more than 5,000 customers worldwide in the manufacturing, financial services, health care, home building, real estate, and wholesale and retail distribution industries. Onyx serves more than 1300 customers in a variety of industries in financial services, health care, contact center, high tech and local government markets.