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Creo Loses In Court: Promptly Increases Offer for Printcafe to $3.00 per share

Monday, February 24, 2003

Press release from the issuing company

February 22, 2003 -- (WhatTheyThink.com) -- On Friday, the Delaware Chancery Court refused to grant Creo’s request for a temporary restraining order to overturn Printcafe’s Stockholders Rights Plan or to temporarily bar the exercise of a stock option granted by Printcafe to Electronics for Imaging. After the ruling, Creo decided to make a formal offer to acquire all of the outstanding Printcafe common shares for $3.00 per share.  The Court’s decision prevented Creo from gaining majority ownership during the bidding process and ensured that all shareholders receive a much better price than originally offered by Creo. With majority ownership, Creo could have potentially assumed control of the board and completed the acquisition without any competitive pressure to pay fair market value for Printcafe. With the ruling in place, the stage is now set for a fair and predictable bidding environment for all potential bidders. Others may enter the bidding too knowing that Creo will not hold majority ownership from the start. Charles Billerbeck, chairman of the Special Committee, said after the ruling, "We are happy to see that the court sided with the Special Committee on all of the issues that were presented to it and allowed us to proceed to maximize the value of Printcafe for all stockholders." Creo’s new offer would be payable in Creo common shares based on the average trading price of Creo shares for a period prior to the closing and is subject to an appropriate collar. "We believe that our proposal offers superior value to the Printcafe stockholders," stated Amos Michelson, Creo chief executive officer. "We stand ready to discuss this proposal with the Special Committee at any time." (See below for a copy of Creo’s letter to Printcafe.) WTT Analysis: No one should count Creo out of the game considering they have poured nearly $100 million into Printcafe already. EFI and other potential bidders must now consider the true value of Printcafe. For companies like EFI and Creo, it would probably be less important for Printcafe to provide a positive and prompt contribution to earnings. The final price from the winning bidder will most likely reflect the value of Printcafe’s customer base, brand and position in the industry. Additionally, the winning company's price will reflect the value of bundling, integrating and cross-selling Printcafe's products with their own related products. Creo’s offer is a non-cash offering meaning shareholders would receive Creo stock as payment. EFI’s current offer is $2.60 per share and is all cash. It is not known if the payment type will be a factor. It should be noted that EFI could raise their price in a combination of cash and EFI stock. EFI has plenty of cash - nearly $500 million and could easily complete an all cash transaction. Creo has about $70 million in cash. It is believed that they would need to include mostly Creo stock in their transaction. (As stated, Creo's current offer is stock only.) Speaking of EFI, the company knows Printcafe’s business well. It was made known Friday in a filing to the SEC that EFI and Printcafe held discussions with respect to a potential business combination during November 2001. No agreement was reached, but EFI continued to follow Printcafe and from time to time held discussions with members of Printcafe's management team. In December 2002, EFI engaged counsel in anticipation of resuming efforts to affect a transaction with Printcafe. Creo has the better offer today. It will be up to EFI to decide how much they are willing to pay. Experts we spoke to on Saturday believe that any price above $3 per share means the bidding has moved past a look at the balance sheet and more toward the potential of the products, also known as “blue sky”. EFI can afford to pay more than Creo for "blue sky".... but will they? Stay tuned..... ---------------- Creo's letter to the Special Committee follows: February 21, 2003 Special Committee of the Board of Directors Printcafe Software, Inc. Forty 24th Street Pittsburgh,Pennsylvania 15222 Gentlemen: We are writing to propose that Creo Inc. ("Creo") acquire all of the outstanding shares of common stock of Printcafe Software, Inc. ("Printcafe") not owned by Creo through a negotiated transaction in which Printcafe stockholders would receive consideration having a value of US$3.00 for each outstanding share of Printcafe. The consideration would be payable in Creo common shares based on the average trading price of Creo shares for a period prior to the closing and also be subject to an appropriate collar. We believe our proposed transaction is in the best interests of the stockholders of Printcafe, who would receive a substantial premium to the consideration being offered by Electronics for Imaging, Inc. ("EFI"). We also believe that the existing business relationships and complementary aspects of our two companies would mean the best possible result for the stockholders, customers and employees of Printcafe. Under your letter agreement dated February 13, 2003 with EFI, we believe that our offer, which represents a 15% premium over EFI's offer of $2.60 per share, constitutes a Takeover Proposal that is reasonably likely to lead to a Superior Proposal (as such terms are defined in that letter agreement).  This allows you to immediately engage in discussions with us in accordance with your fiduciary duties to all Printcafe stockholders. As always, we are prepared to meet with you or your representatives at your earliest convenience to discuss our offer and begin negotiations of definitive documentation.  This proposal is subject to, among other things, Creo's satisfaction with the negotiation and terms of a definitive acquisition agreement and the approval of Creo's Board of Directors, which we are prepared to seek very promptly. Our offer also must remain subject to your not entering into a definitive merger or similar agreement with EFI or any other third party and our satisfactory review of all materials and information that have been provided to EFI and any other bidders. We are prepared to move as quickly as possible in order to reach agreement and close the transaction at the earliest possible date.  We are confident that a definitive agreement can be signed expeditiously. Our offer will remain open until 5:00 p.m. Pacific standard time on February 28, 2003 and will expire at that time if we have not entered into a definitive acquisition agreement with you. Very truly yours, CREO INC.




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