In an attempt to strengthen its position as the second largest pure-play customer relationship management software vendor, Onyx Corp. recently announced its intention to buy rival Pivotal Corp., hoping its offer will win out over a prior bid.
The bid caught Vancouver-based Pivotal by surprise, and it was only informed of Onyx’s intentions the morning the proposal was made public.
Under the terms of the proposed acquisition, Bellevue, Wash.-based Onyx offered a 26 per cent premium over a bid from Oak Investment Partners – which will essentially combine Pivotal and Talisma Corp., a Microsoft Corp.-based e-Service solutions provider in Kirkland, Wash. – and is structured to provide potential tax deferral benefits to investors, Onyx said. The Oak bid was made in early October.
According to Patrick Angelel, vice-president of product marketing and alliances with Onyx, acquiring Pivotal would increase Onyx’s position as a mid-market customer relationship management (CRM) leader. He said the acquisition makes sense for both companies due to the similarities in their product suites and customers.
While Onyx boasts such brand name corporate clients as American Express and Reuters, Pivotal targets the low end of the mid-market – an audience Onyx is looking to address.
“We feel this is a superior offer,” Angelel told ComputerWorld Canada. “It is a very natural fit. No one is in a better position to deliver better value to Pivotal’s shareholders…and customers than Onyx.”
The deal would also enable Onyx to better compete against companies such as Siebel Systems Inc. and Microsoft Corp., Angelel said. But he added that independent of the Pivotal acquisition, Onyx is in a position of strength with its business.
Still, the proposal has come as a surprise not only to Pivotal, but to one industry analyst as well. Denis Pombriant, vice-president and research director, CRM software with Boston-based Aberdeen Group, said many people were under the impression that the Talisma/Pivotal merger was a done deal. But he said the Onyx/Pivotal deal does appear to be a better fit.
“It is rather interesting that the two CRM companies are very similar architecturally,” he said. “I think it may be that Onyx saw an opportunity to consolidate one of its Microsoft-centric competitors in the market, and bring over a large and compatible customer base from Pivotal into the Onyx orbit. I think this will enable the new company to have greater market presence and market power going forward.”
He said it has become “absolutely critical” for companies to be thinking in terms of market presence. Despite slight recent growth, the worldwide CRM software market shrunk by 19 per cent from US$3.7 billion last year to US$3 billion, according to forecasts made earlier this year by Gartner Inc.
As of press time, Pivotal was in the midst of getting its board together to review the Onyx proposal and was not prepared to comment on Onyx’s offer.