bp default image

An Acquisition Frenzy

Three major market developments hit the graphic arts.

Between the May and June 2005 issues, two major transactions and one transaction-in-waiting made the news, all three of which could very well have an impact on your business: EFI's planned acquisition of Vutek; Scitex's announcement that it is looking to sell its shares of Scitex Vision; and Adobe's Macromedia buy.

EFI will acquire Vutek
One of the biggest change of hands to come down the wide-format pike in some time, EFI has signed an agreement to acquire VUTEk, Inc. for approximately $281 million in cash.

EFI is perhaps best known for its EFI Fiery RIP and server, and it has an array of printer OEMs as its customers (none of them direct competitors to Vutek). Beyond its core server and controller technology, EFI also produces proofing solutions (Best), print MIS solutions (Printcafe), and enterprise solutions for document and print management. It's no exaggeration to say EFI is better known on the commercial side of the market than the wide-format segment"?at least up to now.

This was a natural next step for EFI, says Guy Gecht, EFI's CEO. Vutek was the company's first choice when it came to which printer OEM to add to the EFI company roster, he says: "The superwide printing segment is a fast-growing segment of the graphic-arts market, and we had the privilege of looking over the market and talking to a lot of the large players. We knew we had some choices, but felt Vutek was the best acquisition to enter the market. It was the largest company in terms of revenue, plus its UV applications bring interesting advantages to our customers."

EFI, says Gecht, can bring to Vutek its software capabilities and provide financial stability, as well as market reach into the commercial side of the graphic market. In turn, he says, adding Vutek will help EFI expand what it can bring to those commercial customers: "We'll be able to help people find new ways of generating business for themselves, providing more services to their customers." In addition, he points out, EFI will benefit from Vutek's recurring revenue stream in ink and service (which make up about 40% of all Vutek revenues).

What will this acquisition mean to current Vutek users, as well as prospective buyers? For one, "Vutek will now be able to differentiate itself in other ways beyond print quality and speed," says Scott Schinlever, Vutek's vice president of marketing. "As our customers install multiple machines and begin driving a lot of volume through their shops, workflow becomes more and more key"?especially as turnaround times keep shrinking. We'll now have more of an end-to-end solution that customers will be able to use to run their entire business, and not just produce output."

Plus, says Art Cleary, Vutek's cofounder, Vutek customers will "benefit from EFI's culture of innovation, allowing us to remain on the leading edge. Their worldwide reputation, deep industry relationships, and financial stability will allow us to gain greater market reach and provide our valued customers with an even higher quality of service."

EFI is apparently looking to further migrate the Vutek brand and hardware into the commercial side of the marketplace, a strategy Vutek has already had some success with. "Commercial printers have customers who buy this output from someone else"?they're looking to grow their business," says Schinlever. "One of our fastest growing segments comprises the folks that traditionally have not been in superwide printing and are looking to grow into new applications. It's very good to have the companies come together, especially with EFI's footprint and reach into the commercial-print sector."

Headquartered in Foster City, CA, EFI (www.efi.com) employs more than 1,400 people and maintains 25 offices worldwide (US, Europe, Japan, China, Latin America, and the Pacific Rim). OEM partners include Canon, Encad, Epson, Hewlett-Packard, Konica-Minolta, Oce, Xerox, and others. Some of the company's more recent acquisitions include: Splash Technology (color servers, 2000), Best GmbH (preprint, prepress, and inkjet proofing solutions, 2002), Printcafe (software solutions for the printing supply chain, 2003), and T/R Systems (software for print-ondemand, 2003).

Vutek (www.vutek.com) is located in Meredith, NH, and has more than 300 employees worldwide. In 2004, it reported revenues of approximately $130 million. At this spring's ISA show in Las Vegas, the company announced two new wide-format printers: the UltraVu 260 and the UltraVu II 5330 (see May issue, p. 19).

"Vutek will be an excellent addition to EFI's range of best-of-breed innovative solutions for the commercial-print market," says Gecht. "There are many natural synergies between EFI's core expertise in digital-printing innovation and Vutek's digital-inkjet technology. With Vutek's profitable business model, we expect this acquisition to provide EFI with new revenue streams in the future." Gecht says the company is not looking to make any major changes to Vutek as a result of the acquisition, and that most of the Vutek management team will remain in place. EFI expects the transaction to close early in the third quarter of 2005.

Scitex plans to sell its Scitex Vision holdings
In mid-March, Scitex Corporation Ltd. announced that it is now engaged in preliminary negotiations for the possible sale of its holdings in Scitex Vision Ltd. It holds 75.5% of the outstanding share capital in the producer of wideformat printers. Scitex had previously announced that it was pursuing "various strategic alternatives," including a sale and an IPO of its holdings.

Formerly the wide-format printing division of Scitex Corporation, Scitex Vision (www.scitexvision.com) was spun off as Scitex Wide Format Printing Ltd. and later renamed. In January 2003, the company merged with Aprion Digital, the developer of piezo, drop-on-demand printheads. Headquartered in Israel, Scitex Vision currently has 460 employees around the world and had revenues of $128.2 million in the fiscal year 2004. The company reports that it has 1250 printer systems installed worldwide. Beyond Scitex Corporation, Scitex Vision has a few other shareholders as well, including: Ricoh Printing Systems, IBM, Toyo Ink, Clal Electronics, Discount Investments Corp., Hapoalim Nechasim (Menayot), Israel Infinity Venture Capital Funds, Optical Disc Decoration Ltd., and the Technology and Growth Funds.

Scitex Corporation (www.scitex.com) has investments in other companies beyond Scitex Vision. It also has a share of: Jemtex Inkjet Printing Ltd. (www.jemtex.com), the manufacturer and seller of inkjet-based digital-textile printing systems (73.9%); Objet Geometries Ltd. (www.2objet.com), which develops, manufactures, and markets ultra-thin layer rapid-prototyping systems and resins (22.9%); RealTimeImage Ltd. (www.realtimeimage.com), a provider of Internet imaging platforms (14.9%); and XMPie (www.xmpie.com), which produces software for direct marketers that integrates one-to-one campaigns across multiple media channels (3.5%).

Rumors were flying at this spring's ISA show about potential buyers, and in March, the Israeli business daily Globes reported that Hewlett-Packard was on the verge of buying Scitex Vision for $240 million. As of this writing, however, no suitor had officially stepped forward and no deal had been struck.

Adobe to acquire Macromedia
In a move that will most affect print providers who are also involved in online, multimedia, and cross-media projects, Adobe Systems (www.adobe.com) has agreed to acquire Macromedia (www.macromedia.com), the maker of software products including Dreamweaver, Flash, and Freehand. The acquisition is expected to close in the fall of this year.

"Customers are calling for integrated software solutions that enable them to create, manage, and deliver a wide range of compelling content and applications"? from documents and images to audio and video," says Bruce Chizen, Adobe's CEO. "By combining our powerful development, authoring, and collaboration software"? along with the complementary functionality of PDF and Flash"?Adobe has the opportunity to bring this vision to life with an industry- defining technology platform."

Once the acquisition is finalized, Macromedia will be integrated into Adobe; that is, it will not be a standalone entity. At this time, say the companies, no products will be phased out or discontinued as a result of this acquisition; however, over time, Macromedia products will transition to the Adobe brand.

"Both Macromedia and Adobe are passionate about creating and enabling great experiences across a wide range of devices and operating systems," says Stephen Elop, Macromedia's president and CEO, who will join Adobe as president of worldwide field operations. "Our combined teams will be a powerful force for innovation around cutting- edge platforms for delivering content and applications."

Macromedia is based in San Francisco and has approximately 1500 employees.


View more from this Big Picture issue