X-Rite Acquiring Pantone to Extend Reach in the Color Industry
GRAND RAPIDS, MI—08/23/07—X-Rite, Incorporated (Nasdaq:XRIT) a leading provider of color solutions for measuring, formulating, matching, and simulating color, announced today it has entered into a definitive agreement to purchase Pantone, Inc. for $180 million. The deal is expected to close in the fall of 2007.
Pantone, Inc., headquartered in Carlstadt, New Jersey, is an authority on color inspiration for the design world with the PANTONE MATCHING SYSTEM, an innovative system for identifying, matching and communicating colors to solve color reproduction problems in the graphic arts market. Pantone has expanded its color matching system to other industries where accurate color reproductions are critical, including digital technology, fashion, home, plastics, architecture and contract interiors, and paint.
Pantone generated revenue of approximately $42 million in 2006 with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately 27 percent of revenue. Pantone sells its products, services and technology directly, and through hundreds of licensees in over 100 countries in the graphic arts, fashion, home, interior, plastics, architectural, paint, industrial design and consumer markets.
Anticipated strategic, operational and financial benefits of the acquisition include:
• Deepening X-Rite’s range of offerings by adding Pantone’s color standards to its leadership position in hardware, software and services solutions
• Leveraging X-Rite’s global presence and distribution capabilities to expand the reach of Pantone’s color solutions
• Enhancing X-Rite’s revenue-generating opportunities and further diversifying its revenue base
• Accelerating technology and business model innovation
• Achieving significant synergies in marketing, operations and administration
The transaction is expected to be accretive to X-Rite’s cash earnings per share during year two of the combined operations. X-Rite expects to achieve approximately $6.5 million of annual operating expense cost savings associated with the transaction in year two. During the first year, the company expects to incur cash restructuring costs of approximately $5.5 million.