Pivotal rejects Onyx buyout bid

The pending acquisition of midmarket CRM (customer relationship management) software vendor Pivotal Corp. is turning into a game of musical chairs.

The company’s board rejected late Friday rival Onyx Software Corp.’s unsolicited acquisition bid in favor of sticking with a previously announced plan for a private investment firm to take over Pivotal and merge it with Talisma Corp. On Monday, however, the company said it would delay for several days a shareholder vote on the Talisma deal to give Pivotal’s board time to consider an “unsolicited highly conditional” proposal presented to Pivotal by an unnamed party.

The new proposal is a preliminary one, and may not develop into a formal offer, Pivotal said in a press release. Representatives from Pivotal could not immediately be reached for comment.

Pivotal now hopes to hold on Friday a vote previously scheduled to take place Tuesday at a shareholder meeting in Vancouver, Pivotal’s hometown. Pivotal said it will seek at Tuesday’s meeting an adjournment until Friday afternoon.

Pivotal agreed in early October to an all-cash buyout by Oak Investment Partners, which plans to merge Pivotal with Talisma, another software maker in Oak’s investment portfolio. Onyx, a close competitor to Pivotal, offered last week to acquire the company in a stock swap deal. Onyx offered 0.475 Onyx shares per Pivotal share, a trade valued at the time of the announcement at $2.25 per Pivotal share, topping Oak’s $1.78 per share cash offer.

Onyx’s share price has slid since it announced its bid, however. At Friday’s closing prices, Onyx’s bid would be valued at $2.02 per Pivotal share.

The volatility of Onyx’s stock was one reason Pivotal cited for rejecting the deal, along with Onyx’s unprofitability and lack of experience with large mergers. When Pivotal began considering its financial options and soliciting takeover proposals, its advisor did not seek a bid from Onyx because previous discussions between the firms convinced Pivotal that merging with Onyx would not create a stronger company, Pivotal said.

Onyx, Pivotal and Talisma all make sales, marketing and customer service software aimed at midmarket companies. With business software sales slumping for the last several years, smaller vendors in that market have been fighting to remain alive, a situation that has sparked consolidation among competing companies.

Bellevue, Washington-based Onyx said its bid remains open. While the company can’t legally encourage Pivotal shareholders to reject the Oak/Talisma deal at Pivotal’s shareholder meeting later this week, according to an Onyx spokeswoman, it issued a press release suggesting that shareholders will be able to express their opinions through their votes.