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Synavant: shrinking prize in CRM niche battle

Five takeover bids for hugely unsuccessful company

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Synavant has received five takeover bids in the last six weeks.

The latest bid from Dendrite marks what has now become a ferocious battle to dominate a niche CRM market serving pharmaceutical companies selling to healthcare professionals. Synavant's revenue has been in decline for the past three years but, for the bidding parties, the additional market share is worth the cost.

Dendrite has made a third bid for Synavant as it seeks to beat off a challenge for control of the company from Cegedim. With the prospect of a further bid in the pipeline, Synavant's directors have made no comment on Dendrite's latest offer of $3.22 a share, which values the company at $48.9 million.

The battle for Synavant began in March when the company agreed to sell its global interactive marketing business to Cegedim for $43.5 million in cash. Just a few weeks later, Synavant said it had agreed a deal for Cegedim to buy the whole company for $2.30 a share in cash, a premium of 44% over the closing price before the announcement.

Dendrite then put in a bid of its own, of $2.50 per share, and filed a court complaint against the Synavant-Cegedim merger agreement on the grounds that Synavant's directors failed to conduct negotiations with Dendrite in good faith.

But there are few disputes that cannot be solved with a large pile of cash and by May 9 Synavant said it had accepted a $2.83 a share offer from Dendrite and, as part of the deal, legal proceedings were dropped.

On May 14 Cegedim upped its offer to $3.15 a share. It took only 24 hours for Dendrite to increase its bid to $3.22. There is no sign that the bidding is over.

What is extraordinary about the whole saga is that Synavant is a hugely unsuccessful company. By coincidence, it revealed Q1 figures last week that showed a loss of $7.5 million, up from a loss of $1.9 million, on revenue that dropped 22% to $34.8 million.

Synavant's revenue has been on the slide for the past three years. But for Dendrite and Cegedim, it is worth paying a lot more than its current apparent value for the additional market share and to keep Synavant out of the hands of their major competitor.

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