First Coffee for 7 June 2006: Onyx Finally Acquired -- By M2M, Sage CRM and the Sabres, Free Broadband Proves Surprisingly Popular

David Sims : First Coffee
David Sims
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First Coffee for 7 June 2006: Onyx Finally Acquired -- By M2M, Sage CRM and the Sabres, Free Broadband Proves Surprisingly Popular

By David Sims

The news as of the first coffee this morning, and the music is nice, light, unobtrusive, totally backgroundy, inoffensive, anonymous wallpaper cocktail jazz, and some mornings that is just what you need:

CRM vendor Onyx Software Corporation has announced that it has signed a definitive agreement to be acquired by privately-held M2M Holdings Inc., the holding company that is jointly owned by Battery Ventures VI, L.P. and Thoma Cressey Equity Partners and whose primary asset is Made2Manage Systems Inc., an enterprise software and services company.

It’s an all-cash transaction valued at $4.80 per share, or approximately $92 million. The parties anticipate closing the transaction in the third calendar quarter of 2006.

The closing is subject to approval by holders of a majority of Onyx’s outstanding common stock and other customary regulatory and documentation closing conditions.

Certain Onyx directors and officers, representing approximately 17.6% of Onyx’s outstanding shares, have entered into voting agreements in support of the acquisition.

“We believe that this transaction is the right decision for Onyx shareholders, customers,
partners and employees,” said Janice P. Anderson, chairman and chief executive officer
of Onyx. “Upon closing, this acquisition will provide liquidity to shareholders and a
premium to our recent trading prices.”

“Entry into the CRM market enhances Made2Manage Systems’ status as a provider of
enterprise software and services to multiple industries,” said Jeff Tognoni, chief
executive officer of both M2M Holdings and Made2Manage Systems, “and our
consolidation model – under which Onyx will continue to service and grow its distinct
markets, fully backed by the considerable investment resources of our private equity
partners – provides a compelling future for the new combined entity.”

Upon closing of the transaction, Onyx would operate as a separate business unit of Made2Manage Systems.

Orlando Bravo, managing partner of Thoma Cressey Equity Partners, said, “We see an
outstanding opportunity in the relationship between Onyx and Made2Manage Systems
as consolidators of the CRM and ERP software markets.”

This January the Chinese company CDC Corporation announced its intention to purchase Onyx, and in March announced that CDC Software, a wholly owned subsidiary of CDC Corporation, had “presented a new proposal to the board of directors of Onyx Software for a strategic transaction that would combine Onyx Software with CDC Software.”

Onyx’s board of directors had said it would review the proposal.

Under the terms of CDC Software’s new proposal to Onyx, each Onyx shareholder would have a choice to receive, for each Onyx share, consideration consisting of either all-cash, or cash-and-shares in CDC Corporation.

In late March John Clough, chairman of the executive committee for CDC Corporation and vice chairman of the board for CDC Software, said CDC Software still really, really wanted to acquire Onyx, particularly for its Pivotal CRM division.

“The benefits to shareholders and customers are clear and substantial,” said Clough, ticking off complementary industry specialization, products, geographic markets, sales channels and marketing strategies: “On virtually parallel paths, Onyx and Pivotal pioneered the mid-enterprise CRM markets and by joining forces, we have the opportunity to become an even more significant force in the industry.”

While CDC Software was disappointed with Onyx’s response to CDC’s original proposal in early January 2006, in March CDC Software said they have been “even more surprised by the lack of interest” it received from Onyx since then. “In January, we stated that CDC Software remains flexible and open to discussing alternatives to our original proposal,” noted Clough.

Hong Kong-based CDC had offered to combine all the assets of CDC Software with Onyx, and $50 million in cash, for a majority of Onyx’s common stock, keeping Onyx a publicly-listed company. Onyx’s management announced right around New Year’s Day 2006 they were rejecting the deal.

At the time the Puget Sound Business Journal reported “Onyx officials gave a variety of reasons for turning down the offer, including: CDC Software assets are performing poorly; CDC lacks a sustained history of profitable operations and has a poor record of delivering shareholder value; and synergies between the Onyx and CDC product lines are limited.”

Specifically, Dow Jones reported, Onyx said on Jan. 5 its board unanimously rejected CDC’s offer for being “highly dilutive” to Onyx shareholders. Plus they didn’t think there would be anything but “limited synergies” between the companies. And they didn’t like CDC’s idea that Onyx pay a premium for CDC Software division assets.

“One of the big benefits of an enterprise CRM product is the ability to access vital customer data, regardless of device or locale,” noted Todd Chambers, Chief Marketing Officer at Onyx.

In March CDC announced they were forming a new board of directors, separate from the CDC Corporation board, to “focus on key growth initiatives and help the organization to become an independent, standalone company,” CDC officials said.

Sage Software has announced that the Buffalo Sabres National Hockey League team has implemented Sage CRM to automate ticket sales, customer service and marketing activities.

Over thirty Sabres employees access the CRM system to manage sales and marketing programs including the Sabres Insider and SabresKidz Clubs. The Sabres have measured a significant increase in ticket sales and a 20 percent reduction in customer service administration since implementing Sage CRM in 2004, Sage officials say.

“The greatest thing about Sage CRM is the way it ties everything together for us,” explained Tom Matheny, database marketing manager for the Buffalo Sabres. “Sales, marketing and our account services department all use the same information.”

The CRM system generates target-marketing lists to support outbound telemarketing campaigns. Cross-sell campaigns offer Insider Club members the opportunity to receive information about Sabres club-level seating and special event tickets before they go on sale to the general public. The CRM stores the e-mail, fax or phone preference of each fan. Detailed reports allow for any marketing campaign’s offer or call script to be adjusted immediately.

The CRM product’s customizations integrate the system with other applications such as, which processes ticket orders and invoices. Data on each customer and transaction is merged to form a sales history.

The CRM system’s reports help the Sabres calculate demographics for each type of customer. For example, opportunity reports show the percentage of revenue each sales promotion generates, segmented by key demographics. It also handles mail presorting to save on U.S. and Canadian postage, as the team has fans in each country.

From the And Why Wouldn’t They? Department:

England’s Daily Post is reporting that Warrington-based fixed line provider Talk Talk is claiming to have signed 340,000 customers to its “free” broadband service.

Talk Talk, a division of mobile phone retailer Carphone Warehouse, “announced in April that it was offering free broadband to customers signing up to its pounds 9.99 bundle of UK and international calls,” Daily Post says:

“Mr. Dunstone has written in his blog on the Carphone Warehouse website about his “immense frustration’” over the company’s difficulty in coping with the 20,000 calls it has been taking every day from people inquiring about the service… industry analysts had anticipated around 170,000 new customers would sign up for the service.

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