Onyx makes counterplay for Pivotal

Onyx Software launched a bid to buy rival Pivotal on Wednesday for about $58 million in stock, countering an all-cash deal Pivotal agreed to last month.

Under the terms of the bid, which was unsolicited, shareholders would exchange each Pivotal share they own for about 0.48 of an Onyx share, valued at $2.25, based on Onyx's Tuesday closing price.

In October, Pivotal entered into a definitive agreement to merge with privately held Talisma for $1.78 per share in cash, in a deal financed by Talisma investor Oak Investment Partners. A Pivotal shareholder vote to seal the Talisma deal is scheduled for next week. Onyx has asked Pivotal's board of directors to respond to its counterbid, which represents a 26 percent premium over the Talisma offer, by Friday afternoon.

Onyx, based in Bellevue, Wash., would pay a $1.5 million breakup fee to cancel the Talisma transaction, Onyx said.

Pivotal, headquartered in Vancouver, British Columbia, is calling a meeting of its board members to consider the Onyx proposal, after which the company plans to issue a statement, a Pivotal representative said.

Talisma, Pivotal and Onyx all compete in the market for customer relationship management (CRM) software. Each specializes in applications for midsize businesses. The CRM niche has become less hospitable over the past two years because of stagnating sales and Microsoft's entrance into the fray. The stormy conditions have led to several buyouts, including the pending Pivotal deal and Siebel Systems' recent purchase of UpShot.

Combined with Pivotal, Onyx would have 2,600 customers and $110 million in annual revenue, making it among the largest CRM software companies that cater to midsize businesses, ahead of Epiphany and Kana Worldwide, Onyx said.

Onyx shares fell 2 cents to $4.41 on the Nasdaq Wednesday on news of the counteroffer.