Despite being rebuffed for a third time, CDC Software Inc. today took its fight to acquire Onyx Software Corp. to investors, claiming its new offer is superior in terms of value and flexibility to the all-cash transaction the CRM software vendor recently accepted from the holding company that owns ERP software vendor Made2Manage Software Inc.
In a webcast with investors late this afternoon, Eric Musser, CDC Software's executive vice president of strategy, said his company's sweetened offer of either $4.85 a share in cash or the equivalent of $5.00 per share in cash and stock from its parent company CDC Corp. trumps the $4.80-per-share cash offer made by Made2Manage Holdings to acquire Onyx. CDC's revised proposal, he said, represents a premium of up to 4.2% over Made2Manage's competing offer, excluding the effect of $4.5 million in break fees and expenses that Onyx would be required to pay if that deal collapses.
Moreover, Musser said the deal offered by Made2Manage only provides a 2 cent premium over the $4.78-a-share offer CDC made in its second proposal last April. By accepting the Made2Manage offer, Musser said, Onyx's management gave up an opportunity to get CDC's "best and final offer."
Playing to investor sentiment, he pointed out that Onyx's board "didn't even try" to let the situation escalate into a bidding war. Musser said CDC's offer was rejected without any discussion whatsoever, which, he said, raises concerns about the Onyx management team's objectives. He also said that following Onyx's rejection in January of CDC's initial offer, Onyx made statements that suggested its intent to remain independent. It now appears that company management was seeking other offers, Musser stated.
Onyx's inconsistent public statements reflect "a clear desire of Onyx management to mislead the market," Musser declared.
Musser also claimed CDC's third and current offer provides a superior mix of value and choice to Onyx shareholders. "We ask Onyx to reconsider its rejection of our proposal and to move quickly to assess alternatives," he said.
If Onyx stands firm on its rejection, Musser said CDC is considering its alternatives, including a proxy fight -- which could make investors the ultimate arbiter of which acquisition offer is superior. "Launch a formal proxy," suggested a representative of Titan Capital Management, an Onyx investor that participated on the conference call. "That's the only way we know you are serious."
A representative from Loeb Partners Corp., another investor on the call, said CDC needed to do a better job of demonstrating the superiority of its offer by making it "crystal clear that [its] merger agreement is tighter and safer for shareholders" than the one that exists with Made2Manage.
In a statement released last week, Onyx's board of directors reaffirmed its support of the Made2Manage acquisition proposal, noting that the offer provides "Onyx shareholders liquidity at a premium to Onyx's recent trading price, as well as a high degree of certainty that the transaction can be consummated as soon as the third quarter of 2006."
The board also questioned the timing and motivations of CDC's twice-revised acquisition proposal: " ... coming 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 ..." the statement said.
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