Onyx Software Corp. launched an unsolicited bid this morning to acquire its CRM midmarket competitor Pivotal Corp.
The all-stock deal proposed to shareholders comes roughly one month after Vancouver, British Columbia-based Pivotal announced it would be acquired by Oak Investment Partners, a private equity firm, in a $48 million cash deal. Under that plan, Pivotal would then be merged with another Oak Investment holding, customer service software firm Talisma Inc.
Bellevue, Wash.-headquartered Onyx would give investors 0.475 shares of Onyx for each of their Pivotal shares. Onyx said its bid represents a 26% premium over the Oak Investment offer based on Tuesday's closing stock prices.
In a conference call this morning, Onyx executives said they would eventually look to merge the two product lines, but they promised to support Pivotal customers.
"There are clearly synergies in the product lines," said Onyx CEO Brent Frei. "Supporting their current implementations and current products are critical to us."
Though no timetable was released, executives said they envisioned supporting the Pivotal applications for years but not enhancing them. Frei said Onyx, which already offers a Web-based architecture, would be able to speed Pivotal's move in that direction.
Onyx also hopes to rely on Pivotal's channel partners to promote it own component-based CRM model, as well as attract Pivotal's lower-end customers to its hosted CRM partnership with IBM, according to Patrick Angelel, Onyx's vice president of marketing and alliances.
If successful in its takeover bid, Onyx said it would become the second largest pure-play CRM vendor, behind Siebel Systems Inc. Combined, Onyx and Pivotal would have annual revenue of more than $110 million, 2,600 customers and more than 700 employees.
There was no immediate reaction from Pivotal.
Onyx shares closed Tuesday at $4.73; Pivotal stock was at $2.25.
Today's bid is the latest move in a frenetic period of consolidation for business software firms. In addition to Oracle Corp.'s ongoing takeover bid for PeopleSoft Inc., last week Siebel completed its acquisition of hosted CRM provider UpShot Corp.
Kelly Ferguson, principal analyst with Sterling, Va.-based Current Analysis, said it sounds as if Onyx is pulling "a page out of Oracle's playbook." Despite the similarities between Onyx and Pivotal, she thinks the Oak Investment offer better suits Pivotal.
"Having this piggy bank in the background gives the combined Pivotal-Talisma more opportunity to focus on growth," Ferguson said.
Onyx said it hopes to get a response from Pivotal's board of directors by week's end. Pivotal shareholders are slated to vote on the Talisma merger next week. Under Canadian law, 75% must approve the deal.
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