"We are thrilled at the prospect of becoming a part of CDC Software," crowed Pivotal president and CEO Bo Manning. According to the terms of the agreement, CDC will acquire all of the outstanding shares of Pivotal. For each Pivotal share, shareholders may elect to receive either US$2.14 comprised of $1.00 cash plus $1.14 of common shares of Chinadotcom corporation, or $2.00 in cash.

Pivotal will operate as a distinct business unit within CDC Software.

Time Line

The time line leading up to the final sale began in October when Oak Investment Partners made a cash offer to buy Pivotal and merge it with its own Talisma software division. (Actually, Pivotal's saga began about a year ago, as rumors floated that it was searching for a buyer.) Just before the Oak deal was set to be finalized by Pivotal's shareholders, long-time rival Onyx jumped in with its own bid, which eventually was rejected -- in part because, unlike Oak's offer, it was not an all-cash deal.

At that point, another bid was tossed on the table -- this time from CDC Software, a subsidiary of Chinadotcom that makes ERP-related applications. Pivotal's board rejected that offer in the first go-around, as Pivotal spokesperson Larry Dennedy told CRMDaily, because it did not like some of the details as to how the deal would be structured. But CDC then came back with a reworked proposal, which Pivotal deemed a "superior transaction."

CDC's new offer was a proposal to acquire Pivotal either through an all-cash or a cash-and-stock transaction -- an offer that values Pivotal at $53-$57 million, depending on which route the shareholders ultimately choose. Oak's offer roughly translated into $47 million for the company. Onyx's all-stock offer, by comparison, amounted to 20 percent more, valuing the company at $59 million.

Oak had the option to match the CDC offer but chose not to. "After reviewing the current situation, including issues related to the extended process, Oak has concluded that there is no financial justification for increasing the price of its proposed acquisition of Pivotal at this time," general partner Fredric Harman said. According to the terms of the agreement with Oak, Pivotal must pay the company a $1.5 million break-up fee.

Good for the Industry

The tug of war over the mid-market vendor has been a good thing for the industry overall, Aberdeen Group CRM vice president Denis Pombriant told CRMDaily. The losers, obviously, are outbidded Oak and Onyx, both of which had viewed the acquisition as a way to solidify their respective footholds in the CRM marketplace,

"What we are seeing is that there are a lot people finally beginning to understand the value of CRM and the importance of having it as part of their I.T. offerings," he said of the companies that tried to buy Pivotal. "These vendors are finding themselves at a competitive disadvantage by not having it."

Stay Tuned for Part 2: Should Pivotal's Customers Be Worried?