CDC Corp has withdrawn and terminated its offer for Onyx Software Corp, citing obstacles it said Onyx had put in its way. Outlining the problem areas, CDC said Onyx would not discuss adjustments that would enable it to conduct due diligence and had set too short a deadline.
The two had entered into preliminary negotiations on July 21, following CDC’s formal all-cash $5-per-share offer. CDC wanted to complete due diligence before a sale could be completed, while Onyx requested that due diligence be waived.
Onyx said it would consider the due diligence request if CDC made an agreement in principle regarding a form of definitive merger agreement established to Onyx’s reasonable satisfaction that it had sufficient cash available in the US to fund the acquisition, and affirmed its willingness and ability to execute a definitive agreement by July 25, 2006.
The deadline was linked to the shareholder meeting scheduled for August 1 when stockholders will vote on the alternative and board-approved $4.80 M2M Holdings Inc offer.
CDC said Onyx refused to provide certain documents and would not accept that CDC had the funds to consummate the offer. Prior to the withdrawal, Onyx had given guidance of dismal second-quarter results.
Elsewhere, support for the Onyx-M2M combination grew when proxy advisory firm Glass Lewis & Co recommended the offer. Although the CDC offer was higher, the firm considered there to be inherent risks associated with the CDC tender offer, including multiple closing uncertainties. We believe that the proposal fails to offer an adequate premium to cause shareholders to accept the inherent risk of the alternative transaction, it said in its report.
Proxy adviser Institutional Shareholder Services Inc has also recommended backing the M2M offer.