Oak has to decide whether to increase its $1.78 per share cash bid for Pivotal, announced last month, that valued the Canada-based company at about $44 million. Under the deal, Pivotal’s business was to be combined with Talisma Corp, a privately held provider of Microsoft-based eService products based in Kirkland, Washington.
Onyx is offering 0.475 of each of its shares for each Pivotal share, which it said valued each Pivotal share at $2.25 based on Onyx closing price of $4.73. However, Onyx shares slipped 8.9% to $4.40 on news of the deal, cutting the value of the bid to $2.09 for each Pivotal share. With the prospect of an auction for the company, Pivotal shares rose 15% to $2.02.
Though Oak Investment will get a $1.5 million break-up fee if the Pivotal board favors the new offer, Onyx said the synergies of the transaction would make it significantly accretive to shareholders.
Apart from an expanded geographical base, the combined entity would have complementary selling efforts because Onyx sells to the mid-market and above while Pivotal sells to the mid-market and below.
Loss-making Onyx needs to find growth. Revenue has fallen over the past three years and in its third quarter to September 30, it made a loss of $260,000 on revenue 19% lower at $15.4 million. Although Pivotal lost $2.9 million in the same period, it increased revenue 8% to $13.3 million.
This article was based on material originally published by ComputerWire.
