Headline Feeds
Hong Kong-based CDC has made a bid for majority control of Onyx Software (Nasdaq: ONXS), after providing institutional shareholders with information on the proposed structure of the merger and the synergies it believes will result.
CDC went public with its desire to make the acquisition late last year, after trying for several months to arrange a call or meeting with Onyx, according to company statements. Onyx avoided any such discussions, according to CDC. For its part, Onyx claimed that the first time it heard about CDC's ambitions was when the firm announced them in early December.
A combined entity would be valued around US$250 million, according to CDC. More than likely, it would be a stock-and-cash transaction.
Remember Pivotal?
CDC -- which started out as a Chinese Internet portal -- first appeared in the CRM market in 2003, when it stepped into a bidding war for mid-market CRM vendor Pivotal. Eventually, the then-unknown firm succeeded in acquiring Pivotal, its first CRM holding. Over the years, it has made several additional acquisitions in the enterprise software space. CDC already owns a small percentage of Onyx.
Pivotal is Onyx's de facto main competitor, as there are few pure-play mid market CRM vendors left standing.
However, there are enough differences between the company's applications for some interesting synergies to occur if they should merge, Yankee Group analyst Sheryl Kingstone told CRM Buyer.
"Onyx needs to build up its marketing application," she said, noting that "Pivotal can offer that through its acquisition of MarketFirst. Pivotal is strong in the homebuilding vertical -- Onyx is strong in insurance and government."
Good for Onyx?
Under the new management, the company has gained significant momentum over the last year -- no easy feat in the mid-market CRM niche.
"They have been focused on delivering value to customers by concentrating on their entire business -- not just the CRM piece," Rebecca Wettemann, vice president of Nucleus Research, told CRM Buyer.
At the same time, Pivotal has not made any significant progress since the CDC takeover. "We don't really see them much anymore," Wettemann said. "I haven't seen any positive impact from CDC's acquisition."
The immediate benefit of the proposed merger to Onyx, of course, would be an infusion of cash. Competition in the mid-market CRM space has always been robust -- not necessarily from pure-play vendors, but from companies at both the large and small ends of the spectrum.
Echoes of Oracle-PeopleSoft
Microsoft (Nasdaq: MSFT) CRM will make further inroads as well, Wettemann said. Although it is an application best suited for smaller firms now, it is clearly building out its functionality. "Microsoft will begin to market to the lower tier of the mid market," she predicts.
By going directly to the shareholders, CDC is following Oracle's playbook as it fought to acquire PeopleSoft. If CDC's acquisition attempt becomes as ugly, it will backfire on both companies, Kingstone cautioned.
"I would hate to see a robust, well functioning company like Onyx be acquired for its maintenance revenue, for instance," she said, "but -- if done properly -- this could be a good transaction for both. It would provide financial security for a smaller company trying to compete with Oracle and SAP."
Talkback: 
