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Friday, January 6, 2006 - Page updated at 12:00 AM

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Onyx board soundly rejects CDC bid

Seattle Times business reporter

Onyx Software has rejected a $50 million proposal from CDC Corp. of Hong Kong to acquire controlling interest in Onyx.

Based in Bellevue, Onyx makes software to help companies manage customer relations. Company officials said Thursday that a four-member committee of independent directors evaluated the proposal and unanimously decided that it was not in the best interest of Onyx shareholders.

Onyx cited poor performance of CDC's software-division assets, decreasing value of CDC stock since its past two acquisitions and lack of any cash for Onyx shareholders in the deal.

"We think it would be a drag on our business and operations," Onyx Chief Executive Janice Anderson said. Rather than producing a stronger entity, she said, it would risk eroding value for Onyx shareholders.

The proposal was for CDC's software-division assets and $50 million in cash to be rolled into the new company. Onyx would pay a premium for CDC's software assets, and in the end CDC would control 70 to 80 percent of the new company, while Onyx shareholders would hold 20 to 30 percent.

Anderson said she did not think that paying a premium for CDC's assets was justified.

Steven Chan, CDC's acting chief executive, said Thursday that CDC would continue to push its unsolicited proposal, but that it would be flexible on the terms.

"We're a little bit disappointed to come out with a rejection without being given substantial consideration," he said.

Discussions with Onyx were limited to a 30-minute phone call Dec. 30 involving Anderson, CDC Vice Chairman Peter Yip and the general counsels of both companies, Chan said. CDC had wanted to talk with Onyx's board committee directly.

CDC Corp., which operates the China.com Internet portal and was formerly called chinadotcom, is planning an open conference call early today to discuss its proposal.

Chan said CDC has hired an investment bank known for enterprise software mergers and acquisitions to facilitate the deal.

CDC's proposal would have numerous benefits, he said, including, "the immediate creation of a competitive, public, global, integrated enterprise software company with approximately $250 million in revenues which shareholders could immediately trade and which would have access to the substantial capital resources of CDC Corporation to fund new product development and pursue additional growth."

Onyx is looking for partnerships and possibly acquisitions of its own, but is "not actively seeking a sale" of the company, Anderson said.

"We're growing our business and becoming more profitable. We're focused on doing a great job for customers," she said "As to anything else, the future is never something written in stone."

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

Copyright © 2006 The Seattle Times Company

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