Filed by Onyx Software Corporation
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-12 and Rule 14d-2
Under the Securities Exchange Act of 1934
Subject Company: Pivotal Corporation
Commission File No. 0-26867
News Release
FOR IMMEDIATE RELEASE
NOVEMBER 14, 2003
INVESTOR CONTACT: PRESS CONTACT:
Mark Lamb Mary Erickson
Director - Investor Relations Reidy Communications
(425) 519-4034 (605) 325-3286
markl@onyx.com mary@reidycommunications.com
ONYX SOFTWARE EXPECTS SUBSTANTIALLY IMPROVED EARNINGS FOR
ONYX-PIVOTAL COMBINATION
Pivotal Board of Directors Continues to Review the Onyx Proposal
BELLEVUE, Wash - Onyx(R) Software Corp. (NASDAQ: ONXS), a worldwide leader in
successful CRM, today provided additional information on the substantial
strategic and financial benefits that it believes would result from the
successful acquisition of Pivotal Corporation (NASDAQ: PVTL and TSE: PVT).
"As the Pivotal Board of Directors continues to review our proposal, we are
today expanding on our previous statements regarding the anticipated synergies
and compelling business case that form the foundation of our proposal," said
Brent Frei, Onyx Software CEO.
BACKGROUND
On November 12th Onyx announced an unsolicited proposal to acquire Pivotal
Corporation by way of a business combination in a stock for stock transaction.
Under the terms of the proposal, the companies would be combined on the basis of
0.475 shares of Onyx Software common stock for each common share of Pivotal
Corporation, or approximately 12.5 million shares of Onyx. The approximate price
per Pivotal share is $2.25 based on the $4.73 closing price of Onyx common stock
on November 11th. Onyx Software made its unsolicited proposal after being
excluded from the Pivotal company-sale process.
POSITIVE REACTION TO THE ONYX PROPOSAL
In the two trading sessions since Onyx Software's announcement, the NASDAQ
trading volume in Pivotal stock exceeded 5.8 million shares and 0.6 million
shares were traded on the Toronto Stock Exchange -- all at prices well in excess
of the existing $1.78 Talisma offer - strongly indicating that the financial
community believes that the Onyx proposal is superior.
"In addition to the strong support that the financial markets have shown for
Onyx Software's proposed business combination with Pivotal, we are encouraged by
positive comments made by a broad variety of CRM industry observers," said Frei.
These published comments can be reviewed at:
WWW.ONYX.COM/NEWSANDEVENTS/PIVOTALINFO/COMMENTS.ASP.
FINANCIAL SYNERGIES ARE SUBSTANTIAL
Onyx reported revenue of $15.4 million and non-GAAP operating income in the most
recent quarter. Onyx also sequentially increased its quarterly license revenue.
In the same period, Pivotal's revenue was $13.3 million with a non-GAAP
operating loss.
Onyx believes that the expected quarterly incremental profits and cash flows
resulting from the proposed business combination with Pivotal would likely
approach $2 million as early as one to two full quarters following the
acquisition. Onyx expects to incur transaction costs, restructuring, and a
break-up fee as part of the acquisition. Onyx believes that these impressive
results can be achieved even while Pivotal's revenue would initially be
disrupted as a result of the merger uncertainties. Over time, Onyx expects that
incremental revenues as a result of this transaction would exceed Pivotal's
current revenues.
Onyx expects to make investments in several strategic areas of the combined
entity. Those areas include increasing investment in targeted verticals,
expanding Onyx Embedded CRM to Pivotal's partners, and increasing spending on
customer account management and product support for Pivotal customers.
Onyx expects to generate substantial savings through the elimination of many
redundant operations and organizational structures. For example, in aggregate
Onyx and Pivotal spent $4.5 million on general and administrative expenses in
the most recent quarter. The larger combined entity should be able to achieve a
target expense ratio of 10% of revenue, resulting in a potential reduction of up
to $2 million per quarter in general and administrative expenses alone.
Cost savings in areas outside of general and administrative expense could be at
least $2 million per quarter. While the combined entity will benefit from
geographic sales coverage of the two companies that is complementary in many
cases, there is also significant opportunity to eliminate overlap of sales
offices and the infrastructure to support field operations. In marketing, the
combined entity would benefit from the power of advertising, public relations
and marketing efforts combined behind a unified corporate brand. In research and
development, the combined entity would focus efforts on a rationalized product
that maintains the best aspects of both product lines.
COMBINATION ENHANCES ONYX SOFTWARE'S LEADING MIDDLE-MARKET POSITION
The combined entity will be the second largest pure-play CRM vendor in terms of
revenue and Onyx's position in the highly-sought after middle-market segment
would be enhanced. Onyx believes that the Onyx-Pivotal combination will result
in tremendous operating leverage, providing upside potential to Pivotal
investors that is not a possibility under the terms of the Talisma cash offer.
This upside is in addition to the initial premium for Pivotal shareholders
implicit in the Onyx proposal.
"We look forward to further discussing with Pivotal's Board of Directors the
strategic and financial opportunities that a combination with Onyx would offer
shareholders in both companies," said Brian Henry, Onyx Software CFO and
Executive Vice President.
ABOUT ONYX SOFTWARE
Onyx Software Corp. (Nasdaq: ONXS), a worldwide leader in delivering successful
CRM, offers a fast, cost-effective, usable solution that shares critical
information among employees, customers and partners through three role-specific,
Web services-based portals. The Onyx approach delivers real-world success by
aligning CRM technology with business objectives, strategies and processes.
Companies rely on Onyx across multiple departments to create a superior customer
experience and a profitable bottom line. Onyx serves customers worldwide in a
variety of industries, including financial services, healthcare, high technology
and the public sector. Customers include Amway, United Kingdom lottery operator
Camelot, Delta Dental Plans of California, Microsoft Corporation, Mellon
Financial Corporation, The Regence Group, State Street Corporation and Suncorp.
More information can be found at (888) ASK-ONYX, info@onyx.com or
HTTP://WWW.ONYX.COM/.
This communication is not a solicitation of a proxy from any security holder of
Pivotal Corporation or Onyx Software Corporation. Nor is this communication an
offer to purchase nor a solicitation of an offer to sell securities. Any offer
will be made only through an exchange offer statement, information circular,
proxy statement or similar
document. Investors and security holders are strongly advised to read such
document regarding the proposed business combination referred to in this
communication, if and when such document is filed and becomes available, because
it will contain important information. Any such document would be filed by Onyx
Software Corporation with the U.S. Securities and Exchange Commission (SEC).
Investors and security holders may obtain a free copy of such document (if and
when filed and available) and other relevant documents related to the proposed
business combination on the SEC's web site at: www.sec.gov. Any such document
and related materials may also be obtained for free by directing such requests
to Onyx at 425-451-8060. Onyx Software Corporation and its executive officers
and directors may be deemed to be participants in the solicitation of proxies
from Pivotal Corporation and Onyx Software Corporation security holders in favor
of the proposed transaction, should Onyx Software Corporation solicit such
proxies. Information regarding the security ownership and other interests of
Onyx Software Corporation's executive officers and directors will be included in
any such exchange offer statement, information circular, proxy statement or
similar document.
FORWARD-LOOKING STATEMENT
This press release contains forward-looking statements, including statements
about the anticipated cost savings and expected revenues of the combined
Onyx/Pivotal entity, the amount of positive cash flow that would be generated by
the combined entity and the timing of commencement of same, the synergies that
Onyx expects to be present within the combined entity, the extent and timing of
the transaction costs of the proposed transaction, the potential benefit to
Pivotal shareholders of the transaction and the anticipated response to the Onyx
proposal by the Pivotal Board of Directors. Forward-looking statements are based
on the opinions and estimates of management at the time the statements are made
and are subject to risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements. The
words "believe," "expect," "intend," "anticipate," variations of such words, and
similar expressions identify forward-looking statements, but their absence does
not mean that the statement is not forward-looking. These statements are not
guarantees of future performance and are subject to risks, uncertainties and
assumptions that are difficult to predict. Factors that could affect Onyx's
actual results include, but are not limited to the risk that the combined entity
does not produce the benefits or realize the costs savings that Onyx
anticipates, the risk that Onyx is unable to successfully integrate the two
entities in a timely manner, the risk that Onyx has not properly estimated the
transaction costs, the risk that the Pivotal Board of Directors does not engage
in discussions with Onyx, the risk that the attention of Onyx's management is
diverted from the operation of its core business and the "Important Factors That
May Affect Our Business, Our Results of Operations and Our Stock Price"
described in our quarterly report on form 10-Q for the period ended June 30,
2003 as well as our quarterly report on form 10-Q for the period ended September
30, 2003 which will be filed on November 14, 2003. Readers are cautioned not to
place undue reliance upon these forward-looking statements that speak only as to
the date of this release. Onyx undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or circumstances
after the date of this release or to reflect the occurrence of unanticipated
events.