Quote from Seybold Bullitin: What’s in a Name? HP Acquires Scitex’s Name, Along with Its Vision

Source: Seybold Bulletin August 31, 2005 : By Stephen Beals

OUR [Seybold] TAKE:

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One of the more fascinating aspects of this acquisition is that HP bought the Scitex name as well as the company. Scitex had sold off parts of the company on several occasions but had held onto the Scitex name. Clearly, HP is convinced that it has acquired a company whose name alone can bring in business.

Creo didn’t buy the name when it acquired the biggest chunk of Scitex a few years ago. Meanwhile, Kodak, which acquired Creo early this year, is rebranding all of the products that once bore the Scitex name with the Kodak moniker. So even though Kodak now owns most of what once was Scitex, HP owns the Scitex brand name.

For HP it’s a relatively small but significant acquisition. It shows that HP is serious about expanding its market space and gives it some strong footholds in critical emerging economies where Scitex Vision already has made inroads. This acquisition appears to be designed to enhance and increase market penetration rather than to reduce overall costs.

As far as we can tell, HP will leave Scitex Vision largely intact. Scitex Vision’s president and CEO figured prominently in the press presentation and is scheduled to present the companies’ future vision at Print05 in a couple of weeks. HP did discuss some possible cost savings in the service end of the business from “common customer relationship management.”

Scitex’s engineers have a reputation for technological prowess that any cutting-edge company would covet and its technical support team is considered world-class by most observers. It’s a reputation that HP would do well to exploit.

There is some danger that a very large company such as HP might make changes that could dilute this very strong asset. Distributors and end users will watch this very carefully, and HP has much to gain by keeping service levels up to present standards. Of course, the actual integration steps HP will take remain to be seen.

Analysis of a vanishing breed: HP-Scitex Vision- A perfect fit

Scitex Vision CEO Dov Ofer: Market consolidation meant figuring out how we’d fit in.

Gitit Pincas 15 Aug 05 17:33

Dov Ofer

Negotiations were not easy; they lasted over a year with ups and downs, but a deal was closed in the end. Scitex Corp. Ltd. (Nasdaq:SCIX; TASE:SCIX) subsidiary Scitex Vision Ltd. will be sold to US printer and photocopier giant Hewlett-Packard Corp. (NYSE:HPQ) for $230 million in cash.“Personally, besides being very tired, we’re also very pleased,” said Scitex Vision president and CEO Dov Ofer on Friday. “I think we’ve made a great deal for our employees, shareholders and customers. This is a cash transaction with a reputable company, with substantial know-how and capabilities in digital printers, and with a positive history of investment, and staying in Israel. It was already clear to us a year ago that the market was consolidating, and we had to figure out how we’d fit in. Our number one candidate was Hewlett-Packard.”The acquisition of Scitex Vision supplements Hewlett-Packard’s range of wide format printing solutions and digital printers. Hewlett-Packard has bought Scitex Vision’s printer head and ink technologies, which will give it a broad competitive edge. Additional synergy is likely in ink technologies, peripheral services, and support of distribution channels and the chain of supply.

$1 billion in three years

This is Hewlett-Packard’s third investment and second acquisition in Israel. Its biggest acquisition was Indigo in 2002 for $720 million. Two years later, Hewlett-Packard invested $100 million to build HP-Indigo’s ink plant in Kiryat Gat, and it is now paying $230 million in cash for Scitex Vision. In the past three years, Hewlett-Packard has invested over $1 billion in Israel. The present investment strengthens Hewlett-Packard’s position as one of the largest foreign investors in Israel.

Scitex currently owns 77.1% of Scitex Vision (70.6% fully diluted), Clal Industries and Investments Ltd. (TASE:CII) and Discount Investment Corporation Ltd. (TASE:DISI) each own 7.2% (6.6% fully diluted), and company employees own most of the rest. Under the terms of the agreement, HP will pay approximately $230 million in cash to Scitex Vision, of which $24 million will be retained in escrow for 24 months to cover possible indemnification claims and an additional $24.5 million will be utilized to repay Scitex Vision’s retained liabilities, mainly to Israeli banks. In other words, the acquisition includes Scitex Vision’s liabilities.

Scitex is expected to report a capital gain of $75-95 million on the deal. It will receive $100-110 million in cash (excluding its share of the funds in escrow), after the payment by Scitex Vision of retained liabilities to third parties, certain taxes, transaction-related and liquidation payments, and other fees and expenses, which will be added to Scitex’s $141 million in cash reserves. Discount Investment believes that it will make a capital gain of NIS 120-150 million, and Clal Industries will make a capital gain of NIS 122-153 million.

IDB Holding Corp. Ltd. (TASE:IDBH) vice chairman Avi Fischer said, “When the control over the IDB group was changed two years ago, a commitment was made to take all steps needed in order to create shareholder value. Accordingly, we are very excited with this value-creating transaction which, together with the sale of the business of Scitex Digital Printing to Eastman Kodak Company at the beginning of last year and other smaller transactions, have created value of over $300 million for Scitex’s shareholders. We thank the Scitex team and wish success to Hewlett-Packard and the Scitex Vision employees who will shortly join this major corporation.”

Scitex’s demise is definitely more respectable than could have been imagined during the change in ownership of IDB, when Scitex was fighting for market share.

“Globes”: Hewlett-Packard wasn’t the only the only company in the picture when negotiations began. Why did they take so long? After all, you reached a preliminary agreement back in February.

Ofer: “First, Hewlett-Packard is a very cautious company. It has very high standards, and conducts due diligence the likes of which I’ve never seen. No stone was left unturned in Israel or around the world. Second, subsequent negotiations were tough, not over the value of the deal so much as about other aspects. There have been good deals at lower values, and bad deals at higher values, so figures are often misleading. In any case, I can say that the negotiations never broke down. There were ups and downs, but contact with Hewlett-Packard was never broken off. It was always in the picture.”

What was Ofer referring to when he mentioned good and bad deals? He was apparently hinting at the prolonged negotiations in which Electronics for Imaging Inc. (EFI) (Nasdaq:EFII), founded by Efi Arazi, acquired VUTEk, Inc. for $281 million. VUTEk was a private company that was reportedly growing more slowly than Scitex, but was much more profitable over a longer period. Capital market sources believed that EFI was an initial candidate for acquiring Scitex Vision.

If VUTEk was acquired for $281 million, why was Scitex Vision satisfied with a lower value? This reportedly disturbed the rest of Scitex’s shareholders. In retrospect, it could be said that in terms of EBITDA (earnings before interest, taxes, depreciation and amortization) multiples, Scitex Vision got a much higher price, but obviously profit and earnings multiples are interesting, too. The case of VUTEk made it clear that Scitex Vision had no choice. It had to link up with a large player, and could not pursue an independent path.

Deutsche Bank Securities and William Blair & Co. (which collaborates with Poalim Capital Markets – Investment Bank Ltd. in Israel) advised Scitex Vision in its negotiations with Hewlett-Packard. Both Ofer and Scitex president and CEO Raanan Cohen handled the negotiations, accompanied by Scitex chairman Ami Erel and Fischer, on behalf of IDB. Since Scitex Vision is a private company, Scitex will probably not file a proxy document detailing the negotiations process.

“We wouldn’t sign if the price wasn’t right”

Scitex Vision examined alternatives while a final deal still hung in the balance, but in the final stages it did not negotiate with any other company for an acquisition. This did not prevent it from considering an acquisition of Nur Macroprinters Ltd. (OTCBB:NURM). Scitex Vision reportedly considered acquiring Nur, because it is financially troubled and burdened by a bank debt (although the banks are helping out a bit). Nothing came of it, and Nur is still seeking an investor or buyer who can move the company forward.

Scitex Vision also mulled an IPO on Nasdaq, and there were rumors that a company value was over $300 million. “Throughout the negotiations, we had plan B an IPO,” said Ofer. “We didn’t enter into negotiations with Hewlett-Packard with intent to sign a deal with them at any price. If the deal had fallen through, we’d have gone with an IPO or something else.”

In other words, the option wasn’t realistic, and was only a negotiating ploy?

“Of course not. The alternative of an IPO always existed and was absolutely realistic. If the negotiations failed, we’d have carried it out. On the other hand, an IPO isn’t a strategic measure but a purely financial one, and wouldn’t have moved us forward strategically. The market is changing, and I wouldn’t want to compete against the company that Hewlett-Packard would have bought instead of us.”

What about the values? They were higher for the IPO. You might have given greater value to your shareholders.

“It’s true that the values were higher, but an IPO is an apple in the tree, not in your hand. After all, it doesn’t only depend on a company’s performance, but also on 1,001 other external variables. We’ve found the most suitable strategic partner, and we were able to close a deal here and now, rather than wait for some future event that might not materialize.”

Ofer says all of Scitex Vision’s managers and employees will keep their jobs, and that the company will become a separate unit with Hewlett-Packard, the same as HP-Indigo. “There won’t be any lay-offs,” he promises. He said he convened a conference call with all of Scitex Vision’s managers on Thursday night, to tell them about the deal. A conference call with the company’s employees was held the next day.

“We’ll figure out how to celebrate later,” says Ofer. “We’re not celebrating the past. We’re looking forward, and we want our string of successes. Even a deal like this one with Hewlett-Packard won’t cause us to lose our focus. I hope that the coming quarter will be our eleventh consecutive quarter of profitable growth.”

The Scitex Vision-Hewlett-Packard deal is expected to be closed within 60-90 days, when all the necessary regulatory permits are obtained.

In a press release, Hewlett-Packard VP and general manager, Large Format Business Enrique Lores said, “The purchase of this business from Scitex Vision will further accelerate Hewlett-Packard’s push into the rapidly growing digital printing market. Wide-format signage is one of the fastest growing opportunities in the market. Currently, 17% of printing in this area is done digitally, and we expect that to double within the next five years. Scitex Vision is one of the leading companies in this space, with a strong customer base, unique products and technologies and an outstanding customer support organization.”

In a separate press release, Hewlett-Packard (Israel) general manager Gil Rosenfeld said the acquisition of Scitex Vision would strengthen Hewlett-Packard activities in Israel. “This acquisition shows that Hewlett-Packard is showing intensive and constant interest in the Israeli market, and considers it a profitable and promising investment channel. We’re therefore continuing to invest in the Israeli market, with an emphasis on the potential of Israel’s human capital.”

Scitex

Scitex will no longer have any activities, following the completion of the transaction, and will probably be classified as a passive foreign investment company for US federal income tax purposes in 2005 and/or in subsequent years. In addition, upon and subject to the closing of the transaction, Scitex Corporation will license its rights to the “Scitex” tradename to Hewlett-Packard. Scitex Corporation has also agreed, subject to shareholder approval, to change its corporate name. One thing is certain: it will no longer be in the printer business.

Published by Globes [online], Israel business news – www.globes.co.il – on August 15, 2005

The last piece has been sold- HP is acquiring ScitexVision

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HP today announced that it has signed an agreement to acquire substantially all of the assets of Scitex Vision, a market leader in super-wide digital printing, for $230 million from Scitex Corporation Ltd. (Nasdaq: SCIX).

The acquisition expands HP’s leadership in large-format printing into the industrial super-wide category and strengthens its position as a one-stop partner for providers of print services.

Scitex Vision is a market leader in wide and super-wide format printers for signage and industrial applications, such as billboards, banners, street advertising and packaging. Headquartered in Netanya, Israel, the company had revenue of $142 million for the one-year period ending June 30, 2005. Its principal subsidiaries are located in the United States, Belgium, China, Mexico and South Africa. It also has presence in a further 75 countries.

The acquisition complements HP’s existing product portfolio of large-format printers and HP digital presses. It also provides HP with the benefits of Scitex Vision’s proprietary technology for print heads, providing a significant competitive advantage. Other potential areas of synergy between HP and Scitex Vision’s business include inkjet technology, services and support, direct and indirect distribution channels and supply chain.

“The purchase of this business from Scitex Vision will further accelerate HP’s push into the rapidly growing digital printing market,” said Enrique Lores, vice president and general manager, Large Format Business, HP. “Wide-format signage is one of the fastest growing opportunities in the market. Currently, 17 percent of printing in this area is done digitally and we expect that to double within the next five years. Scitex Vision is one of the leading companies in this space, with a strong customer base, unique products and technologies and an outstanding customer support organization.”

Dov Ofer, chief executive officer of Scitex Vision, added: “Joining together Scitex Vision with HP will bring substantial benefits to our customers, the wider marketplace and our employees. Our customers will benefit from access to a wider range of products and services while they continue to enjoy the same high levels of attention they are used to receiving. Our technology will reach a broader audience as it becomes available more widely. And employees will enjoy professional opportunities as the business grows within a leading global organization.”

The transaction is subject to certain closing conditions and is expected to be completed within approximately 90 days. Following completion, the business acquired from Scitex Vision will be fully integrated into HP’s Imaging and Printing Group.

About Scitex Vision

Scitex Vision is a manufacturer and service provider of Piezo Drop On Demand inkjet based digital printing presses and consumables for industrial applications, including wide-format graphic arts, packaging and textiles.

The majority of Scitex Vision’s shares are owned by Scitex Corporation Ltd. (Nasdaq: SCIX). During the four fiscal quarters ended June 2005 Scitex Vision’s revenues totalled $142 million. More information about Scitex Vision is available at www.scitexvision.com.

Will Hewlett-Packard buy Scitexvision?

HP to buy Israeli printer maker Scitex Vision for $230M
By: Sumner Lemon On: 14 Aug 2005 For: IDG News Service (Taipei Bureau)

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Hewlett-Packard Co. Friday announced that it plans to acquire Scitex Vision Ltd. in a move that will expand HP’s large-format printing business. Scitex Vision, in Netanya, Israel, is a maker of wide and super-wide format printers for industrial applications and signs, such as billboards and banners. HP will purchase the printer maker for US$230 million.

Hewlett-Packard Co. Friday announced that it plans to acquire Scitex Vision Ltd. in a move that will expand HP’s large-format printing business.

Scitex Vision, in Netanya, Israel, is a maker of wide and super-wide format printers for industrial applications and signs, such as billboards and banners. HP will purchase the printer maker for US$230 million.

“The acquisition complements HP’s existing product portfolio of large-format printers and HP digital presses,” HP said in the statement.

Scitex Vision had revenue of US$142 million for the one-year period that ended on June 30, HP said. The company has principal subsidiaries in the U.S., Belgium, China, Mexico and South Africa, in addition to presences in 75 more countries, it said.

Wide-format printing is one of the fastest growing segments of the printing market and acquiring Scitex Vision will give HP access to its proprietary print head technology, HP said. As part of the deal, HP will receive a license to use the Scitex brand name from Scitex Corp. Ltd., Scitex Vision’s parent company.

HP expects to close the acquisition of Scitex Vision within 90 days, at which point it will be rolled into the company’s Imaging and Printing Group, it said.

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Kodak Receives Approval from European Union to Purchase Creo

Eastman Kodak receives EU approval for Creo acquisition
05/04/05 – newratings.com

Kodak Logo live

LONDON, May 4 (newratings.com) – Photography film giant Eastman Kodak Co (EK) has received the European Union (EU) anti-trust approval for its proposed acquisition of Canada-based Creo Inc, a manufacturer of digital printing equipment.

Eastman Kodak had announced in January its decision to purchase Creo for $980 million in cash. The deal is part of Eastman Kodak’s efforts to reduce its reliance on photographic films. The European Commission, the regulatory arm of the EU ruled that the merged company is unlikely to impede effective competition. The EC also ruled out the possibility that the company would be able to offer more fully integrated pre-press services, while mentioning that there would be many alternative competing sources of supply.

Scitex is in Preliminary Negotiations for the Sale of Scitex Vision

Formerly the wide-format printing division of Scitex Corporation, Scitex Vision was spun off as Scitex Wide Format Printing Ltd. and later renamed. The company merged with Aprion Digital in January 2003. Scitex Vision is headquartered in Israel and has 460 employees around the world. For fiscal year 2004, Scitex Vision’s revenues were $128.2 million, compared to $102.9 million in 2003, reflecting a 25% increase. Operating income was $9 million in 2004, compared to an operating loss of $8.3 million in 2003. Scitex Vision had net income of $4.7 million in 2004, compared to a net loss of $13.6 million in 2003.

Beyond Scitex Corporation, Scitex Visions other shareholders include 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.

One Step Ahead- Efi Arazi Biography Published

Scitex Vision outsource additional Israeli jobs to China

Scitex Vision Forms Strategic Partnership with Beiren

Manufacturing lines in Beijing for Grandjet Classic are now operational

Scitex Vision has entered into a strategic partnership agreement with Beiren
Group Corporation, the large printing-machinery manufacturer in China. The
agreement initially covers the manufacturing and assembly at Beiren of Scitex
Vision?s Grandjet Classic printer.

?We operate in a highly competitive market. In order to remain competitive and
to retain our market-leading position we must constantly look to strengthen our
product and service offering as well as developing our core technology and
skills. Partnerships such as this are key to bringing new strengths to the
company and achieving these aims,? says Dov Ofer, Scitex Vision president and
CEO.

“The alliance with Beiren demonstrates Scitex Vision’s commitment to the Chinese
market in general and the super-wide format market in particular,? Ofer
continues. ?The experience and capabilities of Beiren coupled with Scitex
Vision’s digital technology know-how will create exciting new possibilities for
our companies and customers alike.?

Beiren worked with Scitex Vision to build manufacturing lines in Beijing for the
GrandJet Classic; those lines are now operational. As part of the agreement,
Beiren Group and Scitex Vision will participate in co-marketing activities,
especially those intended to promote Scitex Vision?s products in China. The
companies will be exhibiting their respective products at the 2005 China Print
Trade show in Beijing. The partnership ?also paves the way for potential joint
product development and other manufacturing activities that combine analog and
digital technologies to create new opportunities for both companies? customers,?
Scitex Vision reports.

Established in 1952, Beiren Group Corporation is one of 520 enterprises mainly
fostered by the Chinese government. Its main products are sheet-fed offset
presses, web-fed offset presses, and post-press packaging equipment.

Kodak to buy Creo

Acknowledging that its chemical-based businesses, led by silver-halide film,
were in irreversible decline, Kodak launched an ambitious strategy in
September 2003 to delve deeply into growth markets in the digital imaging
realm.

Commercial printing “represents one of the three pillars of Kodak’s
digitally oriented growth strategy,” said Kodak’s chief executive, Daniel
Carp. “The purchase of Creo strengthens that pillar, and essentially concludes
the company’s acquisition plan.”

Kodak will pay $980 million in cash, or $16.50 per share, for all the
outstanding shares of Creo, which had about $85 million of cash on its balance
sheet and no debt. The deal has been approved by each company’s board of
directors.

Creo shares rose $1.82, or 12.7 percent, to close at $16.18 in Monday
trading on the Nasdaq Stock Market. Kodak shares rose 39 cents to close at
$33.09 on the New York Stock Exchange.

Creo’s software manages the movement of text, graphics and images from the
computer screen to the printing press.

Kodak, which employs nearly 55,000 people, expects Creo will add at least 5
cents a share to operating earnings in 2006 and about $700 million in sales.
Creo had sales of $636 million in its 2004 fiscal year and about 4,000
employees.

On Jan. 12, Kodak said it was paying $817 million for Sun Chemical Corp.’s
50 percent stake in a jointly owned commercial graphic arts business.

Acquiring all of Kodak Polychrome Graphics, a joint venture started in
1998, will boost Kodak’s revenues by about $1.1 billion, operating profits by
8 cents a share in 2005 and expand Kodak’s global distribution network for
digital printing systems, the company said.

Kodak grew into a photography icon on the strength of its traditional film,
paper and photofinishing businesses, but the 124 year-old company is now
betting its future on filmless technology, from cameras and online
photofinishing to minilabs and X-ray systems.

Digital products and services accounted for around $5.5 billion of Kodak’s
sales in 2004, but will vault as high as $8 billion this year. Chemical-based
businesses will account for around $6.6 billion in 2005, down from $8 billion
last year, Kodak predicted.

Kodak ended 2004 with $1.25 billion in cash on its balance sheet and will
finance the Creo deal by issuing debt. “We have every confidence that we will
have ready access to the debt markets to finance this acquisition,” said
Robert Brust, Kodak’s chief financial officer.

In October, Creo said it was reviewing strategic alternatives, including
acquisitions, alliances and the sale of all or parts of its business. In
recent weeks, a dissident shareholder group that owns 5.8 percent of Creo
shares sought to nominate a slate of directors at an annual meeting in
February to replace the company’s management team.

Creo itself is in the throes of a control battle. Robert Burton, who controls
5.8% of Creo, has declared his intention of replacing the company’s Israel
chairman and CEO Amos Michelson, and of making other dramatic changes. Since the
battle began last October, Creo shares have gained some 75%.

Creo CEO Amos Michelson said, “Today we conclude a strategic review process that
began last summer. The proposed transaction will not only generate immediate
return for Creo shareholders but will also benefit our customers through the
combination of leading prepress equipment and consumables. By uniting our
strengths, Creo and Kodak can continue to actively drive the evolution of the
graphic communications industry while delivering a complete line of the
highest-quality, most competitive products and services in our industry. The
economy of scale gained by combining resources will allow us to speed up product
development and deliver new innovations and breakthrough solutions to the
market.”

“Kodak also stands to gain a great deal from this transaction,” continued
Michelson, “including a pipeline of promising products from Creo’s leading
research and development organization, direct access to the largest installed
base of computer-to-plate (CTP) and workflow systems in the world, and access to
our extremely loyal and supportive customer base.”

The boards of directors of Kodak and Creo have approved the proposed
transaction, subject to certain conditions, including shareholder approval and
receipt of customary regulatory and court approvals. A meeting of Creo
shareholders to approve the transaction is expected to be held on March 29, 2005