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
IMPORTANT INFORMATION
The communications included in this filing are not solicitations of a proxy from
any security holder of Pivotal Corporation or Onyx Software Corporation. Nor are
these communications 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: . 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
The content of the communications included in this filing may contain
forward-looking statements, including statements about the likelihood that the
Pivotal Board of Directors will accept the Onyx proposal, the anticipated
economic performance of Onyx and Pivotal as a combined company and the impact of
the proposed transaction on shareholders of Onyx and Pivotal. 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 Pivotal Board of Directors elects not
to accept the Onyx proposal, the risk that Onyx and Pivotal are unable to reach
a definitive agreement, the risk that even if such a definitive agreement is
reached that the resulting business combination will not realize the anticipated
economic benefits, the risk that Onyx common stock declines or otherwise
underperforms over time, 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 September
30, 2003. Readers are cautioned not to place undue reliance upon these
forward-looking statements that speak only as to the date of this filing. 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
***
[Onyx Software Corporation has posted hyperlinks on its website to the
following articles about the proposed transaction with Pivotal Corporation that
include quotes from interviews with members of Onyx's senior management. These
articles were authored by third parties and should not be viewed as statements
by Onyx Software Corporation.]
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DOW JONES NEWSWIRE
NOVEMBER 13, 2003
UPDATE: BATTLE FOR PIVOTAL IN FULL SWING
By STUART WEINBERG
Of DOW JONES NEWSWIRES
TORONTO (DOW JONES)--The jousting for Pivotal Corp. (PVTL) is underway.
Oak Investment Partners, which made a friendly, all-cash bid for Pivotal
in October, said in a press release Thursday that it believes its bid is
superior to Onyx Software Corp.'s (ONXS) unsolicited, all-stock bid, announced
Wednesday.
Oak bid $1.78 a share for Pivotal , a Vancouver customer-relationship
software provider, on Oct. 8. The bid can be increased by 3 cents a share
depending on Pivotal's financial performance through Oct. 16. Onyx, Pivotal's
main rival, offered 0.475 of a share for each Pivotal share, valuing the bid at
$2.25 a share based on Onyx's Tuesday closing price of $4.73.
"We firmly believe that, when the shareholders of Pivotal review the
details issued of the Onyx proposal, they will conclude that the benefits of
accepting the cash and certainty of the Oak offer dramatically outweigh the
risks associated with the conditional proposal from Onyx funded with a
speculative currency in the form of Onyx stock," Oak said in a press release
Thursday.
Oak, a private equity firm based in Westport, Conn., also said that Onyx's
stock is highly volatile and thinly traded. It urged Pivotal shareholders to
review recent Onyx public filings, which it said it believes reveal a distressed
company with a very uncertain future.
"What would you expect them to say," Onyx chief financial officer Brian
Henry told Dow Jones. "They would like the asset, as would we."
No company knows Pivotal as well as Onyx does, Henry added.
Henry noted that Onyx's stock recently traded above $5.00 for 30
consecutive days. At $5.00 or higher, Onyx's offer would be worth more than
$2.25, he said. However, Onyx shares fell a combined 19% to $4.40 in the two
sessions following the release of Onyx's fiscal third-quarter financial results
on Oct. 27. The stock recovered and approached $5.00 again, but is at $4.28 on
Nasdq Thursday, down about 10% since its bid for Pivotal was announced.
Pivotal is trading at $1.87, down 13 cents.
In the third quarter ended Sept. 30, Onyx, Bellevue, Wash., reported a
loss of $300,000 compared with a loss of $900,000 a year earlier. Revenue fell
to $15.4 million from $19 million, while license revenue dropped to $3.6 million
from $7.3 million.
On an adjusted basis, Onyx earned $600,000 in the latest quarter compared
to breakeven a year earlier.
Henry said Onyx is the only company in its sector to experience two
straight quarters of increasing license revenues and one of two companies in its
sector to report an adjusted profit in each of the last two quarters.
Henry said Onyx believes it has sufficient resources to acquire
Pivotal. "We wouldn't have gone forward with a deal like that if we didn't have
the capability," Henry said, adding that Onyx wouldn't have offered such a high
price for Pivotal if it wasn't "very serious" about winning.
Henry said the drop in Onyx's share price since the announcement of the
Pivotal bid was expected. He said stocks of companies that make takeover bids
typically fall after the offer is announced, while the target stock typically
rises. "It was very expected that our stock would move down on the offer but
that has nothing to do with the perceived value, it's more of a hedging
technique for certain speculators," he said.
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DOW JONES NEWSWIRE
NOVEMBER 13, 2003
UPDATE (2): BATTLE FOR PIVOTAL IN FULL SWING
(Adds comments from Oak Investment Partners and analysts in paragraphs
15-24, updates share prices.)
By Stuart Weinberg
Of DOW JONES NEWSWIRES
TORONTO -- The jousting for Pivotal Corp. (PVTL) is underway.
Oak Investment Partners, which made a friendly, all-cash bid for Pivotal
in October, said in a press release Thursday that it believes its bid is
superior to Onyx Software Corp.'s (ONXS) unsolicited, all-stock bid announced
Wednesday.
On Oct. 8, Oak bid $1.78 a share for Pivotal , a Vancouver
customer-relationship software provider. The bid can be increased by 3 cents a
share depending on Pivotal's financial performance through Oct. 16. Onyx,
Pivotal's main rival, offered 0.475 of a share for each Pivotal share, valuing
the bid at $2.25 a share based on Onyx's Tuesday closing price of $4.73.
"We firmly believe that, when the shareholders of Pivotal review the
details issued of the Onyx proposal, they will conclude that the benefits of
accepting the cash and certainty of the Oak offer dramatically outweigh the
risks associated with the conditional proposal from Onyx funded with a
speculative currency in the form of Onyx stock," Oak said in a press release
Thursday.
Oak, a private equity firm based in Westport, Conn., also said that Onyx's
stock is highly volatile and thinly traded. It urged Pivotal shareholders to
review recent Onyx public filings, which it said reveals a distressed company
with a very uncertain future.
"What would you expect them to say," Onyx chief financial officer Brian
Henry told Dow Jones. "They would like the asset, as would we."
No company knows Pivotal as well as Onyx does, Henry added.
Henry noted that Onyx's stock recently traded above $5.00 for 30
consecutive days. At $5.00 or higher, Onyx's offer would be worth more than
$2.25, he said. However, Onyx shares fell a combined 19% to $4.40 in the two
sessions following the release of Onyx's fiscal third-quarter financial results
on Oct. 27. The stock recovered and approached $5.00 again,
but is at $4.24 on Nasdaq Thursday, down about 10.4% since its bid for Pivotal
was announced.
Pivotal is trading at $1.87, down 13 cents.
In the third quarter ended Sept. 30, Onyx, Bellevue, Wash., reported a
loss of $300,000 compared with a loss of $900,000 a year earlier. Revenue fell
to $15.4 million from $19 million, while license revenue dropped to $3.6 million
from $7.3 million.
On an adjusted basis, Onyx earned $600,000 in the latest quarter compared
to break even a year earlier.
Henry said Onyx is the only company in its sector to experience two
straight quarters of increasing license revenues and one of two companies in its
sector to report an adjusted profit in each of the last two quarters.
Analysts See Potential Counter Offer
Henry said Onyx believes it has sufficient resources to acquire Pivotal .
"We wouldn't have gone forward with a deal like that if we didn't have the
capability," Henry said, adding that Onyx wouldn't have offered such a high
price for Pivotal if it wasn't "very serious" about winning.
Henry said the drop in Onyx's share price since the announcement of the
Pivotal bid was expected. He said stocks of companies that make takeover bids
typically fall after the offer is announced, while the target stock typically
rises. "It was very expected that our stock would move down on the offer but
that has nothing to do with the perceived value. It's more of a hedging
technique for certain speculators," he said.
However, Fred Harman, a general partner at Oak, said Onyx's "eleventh
hour," all-stock bid comes from a company with a "far from robust balance sheet"
and a volatile stock. "It's not stock from Oracle," he said.
In addition, the combined company will have a lot of overlap so revenue
growth may not be as high as Onyx anticipates, Harmon said. Furthermore, to
reduce costs, the combined company will likely need to do some restructuring,
which will be a drag on the balance sheet, he said.
Harmon said that all-stock transactions take time to complete. Due
diligence must be done, circulars need to be written and shareholder meetings
arranged. Meanwhile, Pivotal's business will be conducted under a cloud of
uncertainty, he said. Onyx could even decide to rescind its offer, he said.
"This is a conditional proposal funded by a speculative currency and Pivotal
holders need to understand that," he said.
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Asked if Oak would consider raising its offer, Harman said, "We do not
contemplate raising our bid at the current moment."
Pivotal has yet to respond to the Onyx bid, save to say it received it. A
company spokeswoman told Dow Jones that Pivotal is still reviewing the offer.
Onyx gave Pivotal until 5 p.m. EST (2200 GMT) Friday afternoon to respond.
A shareholder vote on Oak's bid is scheduled for Nov. 18. If the bid is
approved, the deal could close as early as next week, Harman said.
Paradigm Capital analyst Blair Abernethy said he believes a Pivotal merger
with Onyx would help strengthen both companies' sales, marketing and research
and development capabilities. On the downside, he said cross-selling
opportunities would be limited because the companies target the same market. He
recommended investors hold Pivotal's stock pending a formal bid from Onyx and a
potential counter offer from Oak.
CIBC World Markets analyst Paul Lechem said that, while a combined
Onyx/Pivotal will have improved scale and other resources, he believes Pivotal's
board will in all likelihood not endorse the deal, given the competitive dynamic
between the companies and risks associated with an all-stock deal versus the
certainty of a cash bid. That said, Lechem added that Oak may have to sweeten
its bid in response to Onyx's offer.
Lechem and Abernethy don't own any Pivotal shares and neither of their
firms has an investment-banking relationship with the company.
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SEATTLE TIMES
NOVEMBER 13, 2003
BIDDING WAR LAUNCHED FOR PIVOTAL, AS ONYX WEIGHS IN WITH OFFER
BY TRICIA DURYEE
Seattle Times Eastside business reporter
Bellevue-based Onyx Software has offered to buy Pivotal, a move that could
thwart a venture-capital group's effort to merge the Vancouver, B.C., company
with Kirkland-based Talisma.
Oak Investment Partners -- a venture-capital company in Palo Alto, Calif.,
that is heavily invested in Talisma -- offered to buy Pivotal about a month ago.
It wants to take Pivotal private and merge it with privately held Talisma.
Onyx, Pivotal and Talisma all develop customer-relationship-management
software, or CRM. Talisma is the smallest of the three companies, with around
$10 million in annual sales. Onyx and Pivotal have five times Talisma's sales.
Together, Onyx and Pivotal would be the second-largest company focused entirely
on CRM.
Onyx is not interested in acquiring Talisma, company officials said
yesterday.
Onyx's bid is unsolicited. The company asked Pivotal's board of directors
to decide by tomorrow whether it would consider offering its shareholders 0.475
shares of Onyx common stock for each share of Pivotal stock. In the offer, Onyx
would issue 12.5 million shares to Pivotal shareholders, each worth $4.73 based
on Tuesday's closing price -- for a total of $59 million.
Oak's offer, which depends on Pivotal's performance, could reach $48
million in cash, or $1.78 a share. Pivotal shareholders are voting on Oak's
offer Tuesday. By Canadian law, 75 percent of Pivotal voters must agree to the
merger for it to pass.
The Onyx offer is a better deal for Pivotal shareholders, and the Oak
offer seems pretty low, said Al Davis, an Onyx analyst with McAdams Wright Ragen
in Seattle.
"It seems like a reasonable offer from Onyx," Davis said.
A spokeswoman for Pivotal said that its board would meet in the next
couple days to evaluate the offer. Oak declined to say whether it would raise
its offer and referred all questions to executives at Talisma and Pivotal. The
companies' chief executives were
unavailable yesterday because they were on their way to India, where both
companies have development offices.
Onyx said it did not make an offer when Pivotal was up for sale earlier
this year because the company was not asked to participate in the bidding. Since
then, Onyx has evaluated whether to make an unsolicited offer, said Brian Henry,
Onyx chief financial officer. CEO Brent Frei said Onyx believes that buying
Pivotal would be good for shareholders of both companies.
Combined, Onyx and Pivotal would have more than $110 million in annual
sales and 2,600 customers. Soon after a merger, the combined company would begin
to benefit from cost savings. If its purchase of Pivotal is approved, Onyx said
it would continue to support Pivotal's customers and products and would merge
the two eventually. The new company would remain in Bellevue with Frei
continuing as CEO.
In Oak's scenario, Bo Manning, Pivotal's CEO, would take over for
Talisma's Dan Vetras and run the company from Vancouver, B.C.
A month ago when Oak announced it wanted to buy Pivotal, Ben Kiker, Onyx's
senior vice president and chief marketing officer, said such a deal appeared to
be "a shotgun wedding between two troubled companies."
Yesterday, he said he feels the same, but Onyx is willing to pay more
because it wants to win.
"We also want to make sure to send a clear message to the board that our
offer is superior," he said.
If Onyx gets its way, it will be obligated to pay Oak $1.5 million as
spelled out in its offer to Pivotal. The money is a break-up fee and reimburses
Oak for the time it spent on in its bid for Pivotal.
Onyx stock fell 36 cents yesterday to close at $4.37. Pivotal stock
climbed 24 cents to close at $2.
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SEATTLE POST-INTELLIGENCER
NOVEMBER 13, 2003
ONYX SOFTWARE OFFERS TO BUY PIVOTAL
DEAL WOULD MAKE IT SECOND-LARGEST IN FIELD
By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER
Onyx Software Corp. made an unsolicited bid yesterday to buy rival Pivotal
Corp. for $59 million in stock, a move that could eclipse a cash offer presented
last month by venture capital firm Oak Investment Partners and Kirkland software
company Talisma.
Bellevue-based Onyx, whose customer-relationship management software is
used by Microsoft Corp., Suncorp and the Seattle Seahawks, is trying to buy
Vancouver, B.C.-based Pivotal for $2.25 per share. That compares with a $1.78
cash offer -- or $44 million bid -- made by Oak and Talisma on Oct. 8.
Pivotal's board of directors, which was being corralled yesterday
afternoon to consider the new offer, has until 2 p.m. tomorrow to respond.
Pivotal shareholders were scheduled to meet Tuesday to vote on the
Oak/Talisma deal.
A spokeswoman did not know whether that meeting was still on. She declined
further comment.
In a conference call yesterday morning, Onyx executives repeatedly
stressed why they believe their deal is the best for Pivotal's shareholders,
customers and employees.
"Onyx represents a much stronger partner for Pivotal than Talisma due to
the fact that Onyx and Pivotal are of comparable size and share many synergies,"
Onyx CEO Brent Frei said. "I have a clear message for Pivotal shareholders
today: We believe that our offer is superior."
The Onyx deal represents a 26 percent premium over the previous offer. It
also would allow Pivotal shareholders to hold shares of Onyx if they believed
the long-term prospects were bright. The deal also includes potential tax
advantages, Frei said. In order to sever the previous offer, Frei said the
company would pay a $1.5 million breakup fee.
Executives at Oak and Talisma did not return calls.
Together, Onyx and Pivotal would have 2,600 customers, $110 million in
annual revenue and a work force of 735. It would be the second-largest provider
of customer-relationship management software, behind industry leader Siebel
Systems.
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Worldwide sales of CRM software have fallen from $3.7 billion to $2.4
billion in the past two years and they are expected to stay relatively flat
until 2006. That has prompted analysts to predict a wave of consolidation.
Alan Davis, an analyst at McAdams Wright Ragen, said Oak and Talisma put a
"pretty cheap valuation" on Pivotal last month.
That's why Davis believes the Onyx deal could resonate with Pivotal
shareholders, 75 percent of whom must approve the acquisition. But he wonders if
the deal comes too late in the game. He also was intrigued by the fact that
Pivotal did not offer the company to Onyx when it was seeking a buyer earlier
this year.
"It doesn't seem like (Onyx) would get board approval if the board didn't
even shop it to them originally," said Davis. "So then they are going to have to
deal with more of a hostile situation going straight to shareholders."
In another possible scenario, Oak and Talisma could boost their offer in
order to satisfy investors. That could create a bidding war for Pivotal.
"Oak may decide to increase their bid," said Brian Henry, chief financial
officer at Onyx. "That is up to them." [This quote was misattributed in the
original version of this article.]
Shares of Pivotal rose 24 cents to close at $2. Onyx closed at $4.37, down
36 cent
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