CRM Maker Onyx Agrees To Takeover By M2M

Under the deal, M2M will pay $92 million in cash for Onyx. The acquisition extends a consolidation wave in the CRM space that has nearly extinguished the ranks of independent vendors.

Twelve-year-old Onyx, based in Bellevue, Wash., was an oft-circled target despite its history of red ink. Onyx's last fiscal year, ended Dec. 31, was the first profitable one in the company's history, as it reported earnings of $991,000 on revenue of $60.4 million. The year reversed a steady run of declining revenue; Onyx's sales dwindled from a peak of $121.3 million in 2000.

M2M's primary business is Made2Manage Systems, an Indianapolis-based vendor that sells ERP software for manufacturers from a portfolio filled out through acquisitions. Made2Manage said it will continue running Onyx as an independent business unit.

An M2M spokeswoman said the company expects Onyx to maintain its current indirect sales channels and partner relationships. Pending regulatory and shareholder approvals, M2M plans for the Onyx acquisition to close in the third quarter.

Onyx's management accepted M2M's offer after spurning another suitor, Hong Kong-based CDC Corp., formerly Chinadotcom. CDC has been building a portfolio of enterprise applications through acquisitions for several years. It first took a run at Onyx late last year with an unsolicited takeover offer. Onyx rejected that bid, and CDC eventually withdrew it. But in March, CDC renewed its overture with a fresh offer.

In the past, CDC has proved to be a persistent suitor. Two years ago, it landed CRM maker Pivotal, an Onyx rival, after a drawn-out tug-of-war that ultimately pulled Pivotal away from another takeover deal it had already accepted from Oak Investment Partners, which planned to merge Pivotal with Talisma, another maker of midmarket CRM software. Onyx was also involved in that saga; it floated a takeover bid for Pivotal before CDC emerged triumphant.

The CRM market has a been a hotbed of consolidation, with vendors large and small succumbing to the advances of larger companies looking to roll up full suites of enterprise applications. Oracle's purchase of Siebel Systems early this year took out the CRM market's pioneer and largest vendor, but the CRM space's middle tier has also thinned considerably. After Pivotal's acquisition and SSA Global's buyout last year of Epiphany, Onyx was essentially the last big pure-play, traditional CRM vendor left standing. SSA was later bought by another consolidator, Infor.