Commentary & Analysis
Another New Business for EFI
EFI is using both organic growth and acquisitions to get to CEO Guy Gecht’s much publicized goal of reaching $1 billion in revenue this year, and another acquisition was added to the mix this week. Senior Editor Cary Sherburne talked to EFI about how the acquisition of Rialco LLC fits into the mix.
By Cary Sherburne
Published: March 3, 2016
EFI CEO Guy Gecht used this week’s pre-drupa media conference in Düsseldorf as a platform to announce another acquisition. This time it was a smaller company with less than 20 employees located in the UK. Rialco LLC is one of Europe’s leading suppliers of dye powders and color products for the digital printing and industrial manufacturing industries. Rialco will operate as part of EFI’s industrial inkjet business under the management of Stephen Emery, Vice President of the Ink Business and Jetrion at EFI.
I was able to catch up with Steve at the end of a long day for him as he was still in the UK managing the announcement process.
As background, Rialco basically has two lines of business. The one that is most aligned with EFI’s business is the provision of sublimation dyes for textile printing inks. This makes a great deal of sense following EFI’s Reggiani acquisition last summer. Colorants for these inks are comprised of raw materials that are only available in China. Emery said, “Rialco is the leading supplier of purified dyes in the European region and beyond, supplying colorants to ink formulators and other customers. They have excellent color knowledge, a strong R&D staff and very strong sourcing connections in China. They know how to purify the dyes better than anyone. They will continue to sell current and future products to those customers and we are here to help them expand. From an EFI perspective, it is not just a Reggiani play. We will also be looking to them to help us in the development of other pigments and dyes.” He adds that this acquisition represents the first time EFI has done some vertical integration and it makes a strong statement about the company’s commitment to the development of technology for inkjet inks.
Emery indicates that EFI had not been a Rialco customer, although as they began looking more into sublimation dyes, it was clear that Rialco was a dominant supplier.
The other part of the company would be a completely different business for EFI. Rialco also provides colorants for use with pressure-treated wood – that’s the greenish wood you buy to build your deck, fence or gazebo that you hope will withstand the weather better than untreated wood. Its greenish color comes from the copper salts that are used in the treatment process. Rialco has developed a line of colorants, primarily shades of brown, that can be applied to the wood during the pressure treatment process to give the wood a rich, natural color and eliminate the need for staining or painting. Today’s colorants have fade resistance that lasts one to three years. This is a product that is already gaining popularity in Europe and just making its way into North America. Emery comments, “The dyed wood has recently become available at Lowe’s, which is a major step. In Europe, one to two years’ fade resistance is acceptable while in North America, our research indicates two to three years is preferred. The ultimate goal would be to get to five years or more, and Rialco is working on that.”
Colorants for this application are not as dependent on the Asian connection, but Rialco’s advanced knowledge of wood colorants is a big benefit in this market segment. Emery adds, “The wood business is an added plus that gets us in on the ground floor of a new market. There is significant market education that needs to take place, especially in North America, for both retailers and consumers, in order to begin to scale.” Emery admits that the path to this market entry is still under development but he believes there is significant opportunity over time.
So as you are getting ready to build that new deck for this summer’s barbeques, check out the dyed, pressure-treated wood at your local Lowe’s or other hardware store, depending on where in the world you are located. Just think, you build the deck and right away you have a nice appearance without needing to wait weeks or months to properly paint or stain it. Just install it and barbeque away!
As for the dye sub business, we’ll keep an eye on developments and keep you updated. Perhaps we’ll even hear about new developments at drupa.