- Creo reached $4 per share before pulling out of the bidding process. By Gail Kailing with WTT staff February 26, 2003 -- What happens now that Creo has removed their bid for Printcafe? We should know this week, but most agree that this story has moved past “interesting” and is scratching the surface of “ugly”. Damage has been done and has the potential to further disrupt the cooperation between Creo and Printcafe regardless of the new owner. Right now, Creo and Printcafe are on the road with MAN Roland and CIP4 conducting the Computer Integrated Manufacturing (CIM) in Print seminar series. One can only hope that the executive wrangling between Creo and Printcafe stays in the boardroom and does not effect employees or customers. Unfortunately for Creo and Printcafe, it’s not just the financial analysts who watch these maneuvers. Customers and prospects are paying close attention to these events too. In past years, corporate dealings would be settled by the time the industry at large received the details in a trade magazine. With the Internet, corporate activities are available and watched in real-time by industry executives. How could relations between Creo and Printcafe become so strained? Printers we spoke with today blame top executives at both companies for fumbling this from the start. Recovering the fumble is EFI. EFI will most likely proceed to close quickly. Meanwhile, Creo’s lawsuit against Printcafe and EFI is still out there but will probably be withdrawn or dismissed. (On paper, Printcafe’s moves were meant to get a better price for their shareholders. And, the lawsuit was filed in shareholder-friendly Delaware.) An interesting note: it was disclosed in an SEC filing yesterday that Creo raised their offer from $3 per share on Friday to $4 on Saturday. Why? Because Creo’s $3 all stock offer, which included a restrictive “collar” was not as good as EFI’s all cash offer. Creo wanted the same financial information that EFI had received. When they got it, apparently Creo did not like something in the financial documents and pulled their offer; reiterating their displeasure with the bidding process. Many new members have joined the site recently and following is a timeline to help all understand what - and when - key events occurred. Let’s hope we are near the end of this timeline. Timeline of Important Printcafe Events Since the End of 2000: •• 12/31/00 - Creo amend a Feb. 2000 strategic alliance agreement with Printcafe where Creo agreed to undertake joint sales and marketing efforts not to compete with the other’s business. •• 5/14/01 - Printcafe purchases the intellectual property assets of Impresse Corporation. •• 11/01 - EFI and Printcafe hold discussions with respect to a potential business combination. No agreement reached. From time to time holds discussions with members of Printcafe's management team. •• 12/31/01 - Printcafe enters into a $23.6 million credit agreement with Iris Graphics Inc., a wholly-owned subsidiary of Creo. •• 1/1/02 - Creo enters into a sales channel agreement with Printcafe. •• 3/27/02 – Printcafe registers for 2nd attempt at an IPO (Form S-1). •• 6/18/02 – Printcafe IPO yields $37.5 million •• 6/18/02 - Printcafe repays $11.8 million of the outstanding principal balance of the loan to Iris Graphics. The remainder is due 1/1/2004 •• 10/23/02 – Printcafe purchases the assets of printChannel. •• 12/02 - EFI engages counsel in anticipation of resuming efforts to affect a transaction with Printcafe. •• 1/21/03 - Creo agrees to purchase 1,078,060 shares of Printcafe common stock for $1.30 per share from Seligman. •• 1/21/03 - Creo agrees to purchase 1,532,052 shares of Printcafe common stock for $1.30 per share from Harborvest. •• 1/23/03 - Creo proposes to acquire all of the outstanding shares of Printcafe common stock for $1.30 per share, payable in Creo common shares. •• 1/23/03 - EFI sends a letter to Printcafe's board of directors proposing a business combination - a cash offer of $2.60 per share. •• 1/23/03 – Printcafe appoints Special Committee to evaluate offers from Creo, EFI, and other potential acquirers. Creo’s CEO Amos Michelson replaced by Marc Olin as Chairman of the Board. •• 1/24/03 - EFI sends a letter to Printcafe’s Special Committee re-proposing the Business Combination. •• 1/30/03 - Creo and HarbourVest consummate the sale and purchase of 1,532,052 shares of Printcafe Common Stock raising Creo’s position from 30% to 44%. •• 2/6/03 - EFI and Printcafe execute a nondisclosure agreement. •• 2/7/03 - Deadline for Creo’s offer to acquire all outstanding shares of Printcafe passes. •• 2/10/03 - Creo's CEO, Amos Michelson, informs the Printcafe Special Committee that Creo remains interested in negotiating a transaction if given a chance. •• 2/13/03 – Printcafe announces a “Poison Pill” Shareholder Rights Agreement, an EFI Credit Agreement, and an EFI Stock Option Agreement. •• 2/13/03 - Counsel to EFI delivers a first draft of a merger agreement (and ancillary documents) for the business combination to Printcafe’s Special Committee. •• 2/19/03 – Creo initiates litigation against Printcafe and EFI. Files motion for Temporary Restraining Order against Printcafe and EFI. •• 2/21/03 - Delaware Chancery Court refuses to enjoin the provisions of Issuer's Rights Plan, which would be triggered by Creo's purchase of 1,078,060 shares of common stock from Seligman. The Court ruled against Creo on all counts. •• 2/21/03 - Creo postpones the closing of the Seligman purchase. •• 2/21/03 - Creo increases its offer to purchase all of Printcafe common stock to $3.00 per share, payable in Creo common shares and subject to an appropriate collar. •• 2/22/03 - UBS Warburg, the financial advisor to the Special Committee, told Creo's CEO, Amos Michelson, that Creo's offer of $3.00 per share was not adequate because the form of consideration was solely Creo stock subject to a collar and because the Special Committee already had a $2.60 per share offer that had been approved by the board of directors of EFI. •• 2/23/03 - Creo proposes to increase its price to $4.00 per share, based on a floating exchange ratio and subject to a 20% collar. •• 2/23/03 – Printcafe tells Creo that the Committee prefers an offer that permitted stockholders to elect to receive either all cash or all stock, with no collar limiting the stock consideration payable. •• 2/23/03 – Printcafe informs EFI that Creo has conditionally proposed to acquire Printcafe in a transaction in which the only consideration would be shares of Creo common stock valued at $4.00 per share, subject to a 20% collar. •• 2/24/03 - Creo withdraws from the bidding process and terminates prior offers to acquire the outstanding shares of Printcafe Common Stock. •• 2/24/03 - EFI sends a letter to Printcafe modifying the condition to EFI’s obligation to loan funds to Printcafe for working capital purposes. Extends the date from February 24, 2003 to March 3, 2003. •• 2/26/03 - What will happen today?