By Brenon Daly
The progression from spurned bidder to shareholder activist isn’t all that unusual. But it is unusual when the party smarting is a publicly traded company, and decides to express its agitation through press releases. Yet, that’s exactly how Chordiant Software (CHRD) is venting its frustration over not landing Kana Software (KANA), with Chordiant telling the world earlier this week that it plans to vote its shares (amounting to 4% of the total equity outstanding) against the proposed sale of Kana’s operating business to midmarket buyout firm Accel-KKR. Chordiant followed that up on Thursday evening with a new cash-and-stock offer that values Kana higher than the buyout bid.
All of this comes just days before shareholders are slated to vote on Accel-KKR’s offer (the vote is scheduled for Wednesday). Kana’s board continues to recommend that shareholders back the planned transaction, which would effectively carve the business out of Kana and leave only a shell company in its place. We have noted that it’s an imperfect structure, but one that probably serves the fundamentally flawed firm reasonably well. Of course, some shareholders (including Chordiant) don’t agree, and should vote however they want. We would only note that while the two sides argue, Kana continues to burn cash. At the end of its most-recent quarter (ending September 30), the company was down to just $1.8m (it started the year with $7m). While the cash burn is nothing new for Kana, which has lost $4.3bn since its inception, it could become pressing: Kana noted in its proxy that it has a $5.4m debt payment coming due in 2010.