Pivotal's Acquisition By CDC Software Is A Go

The future of midmarket customer-relationship-management vendor Pivotal Corp. is becoming clearer. The company says it has agreed to an acquisition by chinadotcom Corp., through its software unit, CDC Software Corp.

The decision came after several weeks of questions as Pivotal considered a competitive acquisition bid from Talisma Corp., which was financed by Oak Investment Partners. It also nixed a bid from rival CRM vendor Onyx Software Corp.

CDC was the last suitor to enter the fray. Pivotal said Monday that it had entered into a definitive agreement for CDC to acquire all outstanding shares of Pivotal. The acquisition is expected to be completed in February.

"We are thrilled at the prospect of becoming a part of CDC Software," Bo Manning, president and CEO of Pivotal, said in a statement. "We expect that this proposed strategic combination will re-establish Pivotal as the clear leader in the midenterprise market."

According to the agreement, Pivotal shareholders can elect to receive for each share held either $2.14, comprised of $1 in cash and $1.14 in chinadotcom stock, or $2 in cash. If chinadotcom is unable to provide all required information about its business as required by law by the end of the year, however, the share offer may be removed and all shares would be acquired for $2 cash.

As part of the acquisition, Pivotal has received a $2 million loan from chinadotcom at the U.S. prime rate to be used to pay a $1.5 million break fee to Talisma and provide working capital. Oak Investment had the right to match the chinadotcom offer but declined.

The companies said the acquisition by CDC will allow Pivotal to accelerate investments in the company, including increasing technical-support headcount by up to 40%, marketing expenditures by up to 200%, and resuming expansion of R&D and an acquisition program, as well as expand distribution capabilities in Asia.