Pivotal Corporation, a leading provider of customer relationship management (CRM) software for mid-size enterprises, announced that it has entered into a definitive arrangement agreement with chinadotcom corporation through its software unit, CDC Software Corporation (CDC).
Pursuant to this agreement CDC will acquire all of the outstanding shares of Pivotal under a plan of arrangement that will, subject to certain conditions, permit Pivotal shareholders to elect to receive, for each Pivotal share, either:
- US$2.14 comprised of: (i) US$1.00 cash; plus (ii) US$1.14 of common shares of chinadotcom corporation. The value of the share portion of this option will be calculated using the average closing price of the chinadotcom shares on the Nasdaq National Market over the ten trading day period ending two days prior to closing and there are no caps or collars applicable to the calculation; or
- US$2.00 in cash.
There are two circumstances where the US$2.14 cash and share option could cease to be available to Pivotal shareholders:
- if chinadotcom is unable to provide Pivotal with all necessary information about chinadotcom and its business as may be required under applicable law to be included in Pivotal's proxy circular relating to the transaction by December 31, 2003, Pivotal will have the right to notify chinadotcom of this failure. Thereafter, chinadotcom has 15 days to deliver all required information, failing which the US$2.14 cash and share option will be automatically removed and the transaction becomes simply an offer to acquire all Pivotal shares for US$2.00 in cash; and
- if a material adverse change in relation to chinadotcom occurs and Pivotal provides a notice of that fact to chinadotcom, chinadotcom will have a period of 15 days to cure that default, failing which the US$2.14 cash and share option will be automatically removed and the transaction becomes simply an offer to acquire all Pivotal shares for US$2.00 in cash.
The transaction is subject to the approval of Pivotal's shareholders and the Supreme Court of British Columbia, as well as customary closing conditions. Neither financing nor due diligence is a condition to the transaction. Pursuant to its agreement with chinadotcom and CDC, Pivotal has received a US$2 million loan from chinadotcom bearing interest at the U.S. prime rate, to be used by Pivotal to pay a US$1.5 million break fee to Talisma Corp., to fund working capital requirements and for general corporate purposes.
The parties anticipate that an application will be made to the Supreme Court of British Columbia to call an extraordinary meeting of Pivotal's shareholders to consider and approve the plan of arrangement in early January of 2004, that a proxy circular in respect of such meeting will be mailed to Pivotal's shareholders in mid-January and that the meeting of Pivotal's shareholders, the final application to the Supreme Court of British Columbia and closing of the transaction will occur in February of 2004.
Under the terms of Pivotal's agreement with Oak Investment Partners, Oak Investment Partners had a right to match chinadotcom and CDC's offer, but declined to exercise this right. Accordingly, Pivotal has terminated its agreement with Oak Investment Partners and is paying a $1.5 million break fee to Talisma Corp. in accordance with the terms of that agreement.
Eric Rosenfeld, Chairman of the Special Committee of Pivotal said, "Although it may not have always been apparent to outsiders, every step that the Special Committee has taken throughout this process has been with the intention to maximize shareholder value for Pivotal. We are pleased that the execution of this agreement with chinadotcom and CDC will further that goal."
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