In a prepared statement, CDC says, "While CDC Corporation continues to believe that a strategic combination would be highly complimentary, would generate substantial synergies and optimize value for both CDC Corporation and Onyx shareholders, it has now concluded that it would be prudent to discontinue its pursuit of a business combination between CDC Software and Onyx. The execution risks of the proposed transaction are heightened given the circumstances including the lack of receptiveness by Onyx's management and board and uncertainty of the Onyx business prospects. CDC is therefore unwilling to offer a cash or share premium to the Onyx shareholders at this time given that the valuation is already significantly higher than when CDC first approached Onyx with its proposal."
Onyx says it first received an unsolicited proposal from CDC on December 6, 2005. In mid-December the parties agreed to meet on December 30, 2005 to discuss the CDC proposal.
Based upon discussions at that meeting, and upon subsequent assessment of the proposal, Onyx's Special Committee had determined that the proposal from CDC was not in the best interests of Onyx shareholders.
In particular, Onyx says that the CDC Software division assets are performing poorly, as evidenced by lower reported 2005 license growth compared to Onyx, and CDC lacks a sustained history of profitable operations and has a poor track record of delivering shareholder value.
Late last week CDC Software turned its eyes to a new face-saving acquisition. Its agreement to purchase JRG Software is expected to close by the end of the month.
JRG's One Plan is an on-demand solution for factory planning and scheduling that combines a highly interactive graphical planning environment with integrated business intelligence to enable the real-time creation, sharing and monitoring of production plans across a manufacturing organization.
Steven Chan, acting CEO of CDC Corporation, said, "JRG is one of several acquisition targets that we are actively evaluating and negotiating and look to conclude this quarter. The acquisition of JRG reflects our commitment to leveraging our strong balance sheet of US$212 million in net cash to continue acquiring synergistic companies and products. In addition to double-digit organic growth, acquisitions will be used to expand our solution offerings, broaden our global reach and solidify our position as a worldwide leader in the enterprise software markets."
There is no indication yet how much CDC plans to pay for JRG.