Friday, January 15, 2010

Serial-acquirer CDC Software walks away from Chordiant, announces another deal (CDCS, CHRD)

I-banker's dream company here.  

In a tersely-worded press release, CDC Software(CDCS) announced that it is no longer interested in pursuing Chordiant Software(CHRD), and they have sold the chunk of CHRD stock they'd built up:

SHANGHAI & ATLANTA--(BUSINESS WIRE)--CDC Software Corporation (NASDAQ: CDCS - News), a global provider of enterprise software applications and services, today announced that it has withdrawn its offer to acquire Chordiant Software, Inc. and has sold its entire holdings in the company, representing approximately 1.3 percent of Chordiant’s 30.4 million shares outstanding.
As previously reported, CDC Software announced its intention to sell its holdings after Chordiant issued a press release rejecting CDC Software’s offer to acquire all the outstanding shares of the company."

I mentioned this deal back on January 7th, suggesting that CHRD shareholders might be better off taking the deal and the CDCS stock offered.  Today CHRD shares are off about 4.5%, so we will see if management was correct in rebuffing this offer.  

Later in last night's press release, CDCS go on to mount a personal attack on the anti-takeover provisions of Delaware General Corporation Law Section 203, and I'll spare you that.  What is interesting is the description of their takeover strategy:

"Earlier this week, we announced that we had increased our profitability guidance for the second time since it was originally issued in August 2009. Our increased profitability metrics were fueled by healthy organic growth, increased cross-selling opportunities and growth in all of our key vertical markets. That is why we are moving on to pursue other potential acquisition targets. Most notably, CDC Software has a successful track record of integrating subscale software companies by lowering inflated operating cost structures and driving more cross-sell synergy to our 6,000 customers globally. All of which helps position these businesses for organic growth and profitability. While we could not help Chordiant in this way, we are considering other companies that we hope are more amenable to engaging in meaningful discussions that would potentially add value for their stakeholders.”

Along those lines, they announced today that they've signed a "term sheet" to acquire a supply chain firm for an undisclosed amount.  Best of luck to them on their continued acquisition spree:

“Based upon our analysis and projections performed to date, this planned acquisition is expected to be earnings accretive immediately, and we believe it would be an excellent cross-selling fit with our CDC Supply Chain, Ross Enterprise and the newly acquired Activplant and Truition solutions,” said Bruce Cameron, president of CDC Software. “This company’s solutions are used by some of the world’s leading brands in the high tech, industrial and CPG markets, and their international presence in Europe and Asia would also complement the established infrastructure CDC Software already has in those regions. We also believe this new technology will provide our customers with a 360 degree view of their supply and demand requirements and constraints, as well as the analysis needed to optimize their supply chains.”
Copyright 2010 AlphaNinja

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