Onyx Responds to CDC's Recent Communications and Reaffirms M2M Transaction
June 22 2006 - 10:24PM
Business Wire
The Board of Directors of Onyx Software Corporation (Nasdaq:ONXS)
today responded to the recent press releases issued by CDC Software
regarding the definitive merger agreement executed between Onyx and
M2M Holdings, Inc. The Board reaffirms its support of the all cash
transaction with M2M, which offers Onyx shareholders liquidity at a
premium to Onyx's recent trading prices, as well as a high degree
of certainty that the transaction can be consummated as soon as the
third quarter of 2006. Onyx is prohibited by the terms of its
definitive merger agreement with M2M from participating in any
discussions or negotiations regarding a possible transaction or
furnishing to CDC any due diligence information, unless the Onyx
board of directors reasonably determines in good faith, after
consultation with its financial advisor and its outside counsel,
that the CDC announcement constitutes or would reasonably be
expected to lead to a transaction that is superior to the
definitive agreement with M2M. The Board has determined that it
cannot conclude that any or all of the CDC announcements are or are
reasonably likely to lead to a superior transaction for the
following reasons: -- CDC's June 20, 2006 press release described
an all cash $4.85 offer, yet only two days later, CDC has abandoned
its all cash offer and now purports to offer Onyx shareholders only
a combination of cash and stock, demonstrating CDC's inconsistent
statements and unpredictable behavior; -- Although CDC's highly
contingent combined stock and cash offer has a purported value of
$5.00 per share, even with the vague and limited collar proposal
described by CDC in its letter, there is a substantial likelihood
that, based on changes in CDC's stock value, the actual nominal
price to be paid to Onyx shareholders could be as little as $4.50
per share, as compared with the $4.80 cash per share to be paid to
Onyx shareholders pursuant to the executed definitive merger
agreement with M2M; -- Furthermore, the long-term value of the CDC
stock portion of the consideration stated in the press release is
highly uncertain because CDC lacks a sustained history of
profitable operations and has a poor track record of delivering
shareholder value and there would be limited synergies between the
Onyx and CDC product lines; -- Although CDC has indicated an amount
it appears to be prepared to offer, CDC states that its offer is
contingent on negotiation and due diligence and there is no
guarantee that CDC will be offering the same price at the end of
the indeterminate negotiation and due diligence period that CDC
proposes; -- There is no certainty that any discussions with CDC
would result in a signed acquisition agreement -- CDC emphasizes
that its highly contingent offer is subject to due diligence and,
further, its past inconsistent and unpredictable statements and
nonresponsive behavior, which are described in detail in the proxy
statement Onyx has filed with the Securities and Exchange
Commission (SEC), are inconsistent with any credible intention to
acquire Onyx; -- CDC has not stated any proposed timeline under
which it would be able to execute its described transaction;
furthermore, the transaction CDC describes, because it involves
both cash and CDC stock, would likely take several months longer to
complete than the proposed transaction with M2M due to the need to
file a registration statement with the SEC; -- CDC has repeatedly
declined, since its original press release in December 2005, to
engage in any negotiations with Onyx regarding the possibility of a
strategic transaction and has, in the past, been nonresponsive to
multiple contacts from Onyx and Piper Jaffray, Onyx's financial
advisor, to pursue such discussions; -- The timing of the most
recent announcements, again coming in the final weeks of a fiscal
quarter, combined with CDC's previous behavior, suggests the
possibility that CDC's announcement is disingenuous and that its
true intention is to harm Onyx's business and enhance CDC's
competitive position in the sales process, rather than engage in
serious negotiations; and -- In light of CDC's past and current
competitive behavior in the sales process and its approach to
discussions with Onyx, there are significant risks to Onyx and its
shareholders associated with sharing, through a due diligence
process, competitively sensitive information with CDC that could be
used offensively to harm Onyx's business in the competitive
marketplace. CDC states in its June 22, 2006 press release and
related letters, without any foundation or knowledge on which to
base its assertion, that existing Onyx management has a conflict of
interest with respect to the M2M transaction because CDC believes
that Onyx management will have a continued role with the surviving
company following closing of the M2M acquisition. These assertions
are baseless, as M2M has made no final decisions regarding the
post-closing management structure and, in addition, Onyx has been
advised by M2M that neither Onyx's chief executive officer nor
chief financial officer is expected to continue as an executive of
the combined M2M organization beyond a transition period to be
determined. Furthermore, the interests of Onyx directors and
officers in the transaction are disclosed fully in the preliminary
proxy statement filed by Onyx with the SEC. CDC also has challenged
as excessive the break-up fee agreed to by Onyx and M2M. The up to
$4.5 million break-up fee, which would include certain M2M legal
expenses, amounts to approximately 4.8% of the aggregate value of
the M2M transaction. This is well within the bounds of customary
break-up fees in transactions of this nature. As is common in
transactions of this nature, this break-up fee was insisted upon by
M2M as a condition to its willingness to pursue a transaction with
Onyx. Onyx shareholders are urged to carefully read the background
of the merger section of Onyx's preliminary proxy statement to gain
a further understanding of CDC's historical interaction with Onyx
and to understand the full context of CDC's more recent
announcements. Onyx and its advisors repeatedly extended the
opportunity to CDC to participate in the process that led to the
definitive agreement with M2M, yet CDC declined to participate on
the same terms as every other participant in that process. Onyx
continues to believe that the $4.80 cash per share to be paid to
Onyx shareholders pursuant to the definitive merger agreement with
M2M represents a superior transaction for Onyx shareholders when
compared with the highly contingent, part cash, part stock proposal
stated by CDC in its recent announcements. Onyx intends to continue
to pursue satisfaction of the customary closing conditions to the
transaction with M2M with a goal of consummating the transaction as
soon as possible during the third quarter of 2006. Additional
Information About the Proposed Transaction and Where to Find It In
connection with the proposed transaction, on June 16, 2006, Onyx
filed a preliminary proxy statement with the SEC. Investors and
security holders are advised to read the preliminary proxy
statement, the definitive proxy statement, when it becomes
available, and any other relevant documents filed with the SEC
because they contain important information about the proposed
transaction and Onyx. Investors and security holders may obtain a
free copy of the preliminary proxy statement and other documents
filed by Onyx from the SEC Web site at www.sec.gov. Onyx's
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of Onyx in
connection with the proposed transaction. A description of certain
of the interests of directors and executive officers of Onyx is set
forth in the preliminary proxy statement. About Onyx Software Onyx
Software Corporation (Nasdaq:ONXS) is a worldwide leader in
customer management and process software for mid- and large-size
enterprises. Onyx provides flexible solutions that enable
organizations to automate, manage and evolve their customer
processes quickly and cost-effectively for strategic advantage. By
providing an integrated suite of customer process automation
applications encompassing customer management, process management,
and analytics capabilities, Onyx enables enterprises to reduce
costs, increase productivity, and grow revenue. Major companies are
aligning their customer-facing departments and managing their
customer processes with Onyx software -- companies such as Amway
Corporation, Mellon Financial Corporation, The Regence Group, and
State Street Corporation. More information can be found at
888-ASK-Onyx, info@onyx.com or http://www.onyx.com/.
Forward-Looking Statements This press release contains
forward-looking statements, including statements about the
potential benefits of the proposed M2M acquisition to Onyx
shareholders and about the expected closing of the proposed
acquisition. Forward-looking statements are based on the opinions
and estimates of management at the time the statements are made and
are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated in the
forward-looking statements. The words "predict," "believe,"
"expect," "intend," "anticipate," variations of such words, and
similar expressions identify forward-looking statements, but their
absence does not mean that the statement is not forward-looking.
These statements are not guarantees of future performance and are
subject to risks, uncertainties and assumptions that are difficult
to predict. Factors that could affect Onyx's actual results
include, but are not limited to, the risk the transaction is not
consummated or is not consummated within the expected timeframe,
the risk that the expected benefits of the proposed acquisition are
not realized and the "Risk Factors" described in our annual report
on form 10-K and our quarterly report on form 10-Q and other
filings with the Securities and Exchange Commission which are
available on our investor relations home page at
www.onyx.com/investors. Readers are cautioned not to place undue
reliance upon these forward-looking statements that speak only as
to the date of this release. Onyx undertakes no obligation to
update publicly any forward-looking statements to reflect new
information, events or circumstances after the date of this release
or to reflect the occurrence of unanticipated events. Onyx is a
registered trademark of Onyx Software Corporation in the United
States and other countries. Other product or service names
mentioned herein are the trademarks of their respective owners.
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