Onyx Software Corp has rejected CDC Corp’s latest cash offer for the company and has recommended that its shareholders vote for the M2M Holdings Inc offer.
In the latest round of this bitter contest, Onyx said the bid represents a substantial threat to shareholder value that is not offset by the small premium reflected by the offer price of $5.00 per share compared to M2M’s $4.80 offer.
The reasons given for the rejection included the belief that the offer is highly conditional and questions over whether CDC has the available cash or sufficient liquidity to close the deal. Onyx also raised a query over ownership. It said the CDC tender offer was made by a CDC-owned Cayman Islands-based shell company which would make it difficult to enforce any civil liabilities against CDC in the event of a breach of contract.
In a separate action, CDC has acted on a previous threat and filed a lawsuit against Onyx, its directors, and M2M Holdings, alleging breach of fiduciary duties related to Onyx’s failure to pursue any meaningful discussions regarding CDC’s acquisition offers, agreeing to excessive break-fee and expense arrangements in the current agreement with M2M Holdings, and acting in their own self-interest by including certain benefit arrangements in the agreement with M2M Holdings. The suit was filed at King County Superior Court in Seattle, Washington.