5th January 2006 Hong Kong-based business applications provider CDC Corporation has stepped up its aggressive pursuit of rival customer relationship management vendor Onyx Software.
CDC is now trying to persuade Onyx’s shareholders to back its merger proposals, having failed in its initial attempt to win support from the Onyx management board.
In early December 2005, CDC approached Onyx’s executives with an offer to merger its CDC Software division with Onyx. A statement from CDC described the Onyx directors as ‘disinterested’ after they failed to come to a decision before the end of the year.
“In response to the interest of Onyx’s shareholders, we have re-emphasised our theme that size does matter in this space and remain open minded towards simplifying the proposed transaction structure,” said Mr. Steven Chan, acting CEO of CDC.
CDC – itself a shareholder of Onyx – says that the CRM vendor’s current strategy is delivering a poor return for its investors. Chan believes that the merger of CDC Software and Onyx would create a software company with $250 million in revenues, giving it the scale to compete in the cutthroat enterprise application market.
“Like it or not, financial viability, size, scale, breadth of product line and company stability matter in today’s market,” said Rick Marquardt, President of CDC Software. “With the industry consolidation taking place through companies such as Oracle, Epicor, Infor and SSA Global, to name a few, it becomes pretty clear what the end game is.”
CDC has built its software division through a number of acquisitions, including process manufacturing software maker Ross Systems, CRM vendor Pivotal Corporation as well as owning majority interest in supply chain software company Industri-Matematik International.
CDC will hold a conference call to gauge the receptiveness of Onyx’s shareholders to its proposals. Should the Onyx board continue to show no appetite for the proposals, CDC could launch a hostile takeover.
