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CDC has made another proposal to buy Onyx (Nasdaq: ONXS) following its failed attempt in January. At the same time, it announced plans to form a new company to manage the various enterprise applications under the corporate umbrella.
While the corporate restructuring is not directly related to its new offer for Onyx, CDC hopes it will sweeten the pot for reluctant shareholders.
"There are not that many natural synergies between online games, mobile applications and the enterprise markets," explains Scot McLeod, senior vice president of marketing for CDC, referring to the many diverse companies the Hong Kong based firm owns.
"We believe separating ourselves as an enterprise application provider and setting a new course of direction would be best for us and our shareholders and customers," he told CRM Buyer.
Not Much New in the Deal?
The main reason for the failure of CDC's January was not so much the financials of the proposed transaction as the value proposition the company as a whole offered -- or rather, didn't, said Nucleus Research Vice President Rebecca Wettemann.
"They have to convince the investment community, Onyx's shareholders and customers that CDC can bring more value by making Onyx a part of their organization," she told CRM Buyer.
The new offer has the same handicap, Wettemann pointed out, even though CDC said it addresses earlier shareholder issues.
"The reluctance is not about share splits or other financial details," she said.
CDC could help convince Onyx shareholders and customers, for example, by providing a clear product road map showing how they would continue to develop the Pivotal and Onyx platforms.
"They would have to demonstrate that the proposed change in corporate structure is more than just cosmetic," suggested Wettemann.
Focus Areas
The company will offer more detailed plans for development, McLeod maintains.
"We are going to focus on three areas: the first will be CRM applications; second will be extended enterprise applications for the process manufacturing markets; and third will be value-added business services that complement both CRM and extended enterprise applications," he said.
The new offer for Onyx also addresses specific financial concerns that McLeod said shareholders expressed during the first attempt to acquire the company.
"Some shareholders said they wanted to take cash out of the deal 
, and that option wasn't part of the original offer we made," he noted. The new offer provides investors with that choice.
"However, our belief continues to be that the two companies combined are greater than the sum of its parts," McLeod emphasized, "so we are hopeful that Onyx shareholders will want to be investors in this larger operation."
Under the terms of CDC Software's new proposal, each Onyx shareholder would have a choice to receive, for each Onyx share, consideration consisting of either (a) all-cash or (b) cash-and-shares in CDC Corporation.
Onyx shareholders that elect all-cash would receive US$4.57 per share. Shareholders who opt to receive cash-and-shares would receive $4.78 per share comprised of 50 percent, or $2.39, in cash and 50 percent, or $2.39 in registered Class A Common Shares of CDC Corporation.
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