September 28, 2006 -- (See comments and analysis below from Cary Sherburne, WhatTheyThink.com's Senior Editor) -- EFI has signed an agreement to acquire privately held Jetrion LLC, a subsidiary of Flint Group Incorporated, for approximately $40 million in cash. Jetrion is a leading innovator of inkjet printers, inks and custom printing systems for the label and packaging industries. EFI expects the transaction to close in the fourth quarter of 2006, subject to certain closing conditions. "Jetrion's advanced technology and very talented team are great additions to our inkjet business and are a key element in fulfilling our strategy to expand our presence in the industrial inkjet market," said Guy Gecht, EFI CEO. "We are especially impressed with Jetrion's packaging and label printing expertise, and we see this as an emerging market opportunity for digital printing given the increasing demand for short-runs, variable content and fast turn-around in these segments. In addition, the Jetrion and VUTEk development capabilities complement each other quite nicely. Combining EFI's leadership in precision color and intelligent, high speed Raster Image Processing (RIP) technology with the market-leading innovation of the VUTEk and Jetrion product lines will give us multiple opportunities to share expertise, benefiting all of our products." "We are excited to join the EFI team and be able to leverage their global reputation, vast industry relationships and financial strength to gain greater market reach and provide our valued customers with an even higher quality of service," said Dr. Kenneth Stack, president of Jetrion. "Our customers and employees will also benefit from EFI's culture of innovation and technical depth, allowing us to remain competitive and forward-thinking." The acquisition is expected to add between $3 million and $5 million in revenues to EFI's fourth quarter results with an immaterial impact on pro forma earnings. For the full year 2006, Jetrion is expected to post revenues of approximately $16 million to $18 million. The Jetrion products are currently anticipated to show top line growth of 30-40 percent in 2007 and again have an immaterial impact to pro forma earnings as EFI makes investments to expand the Jetrion product line and distribution. ____________________________ More Comments and Analysis by Cary Sherburne, WTT Senior Editor At first blush, this acquisition is a bit puzzling, from the perspective of both EFI and the Flint Group. WhatTheyThink spoke with representatives of both companies to gain further insight on the acquisition. According to Andy Schaer, Senior Director of Corporate Communications for EFI, “This acquisition is not as far afield as it may seem. There is a lot of good synergy between Jetrion's business and what we do, particularly with the inkjet expertise we have in our VUTEk business. Although they are different applications, both have excellent inkjet technology and ink manufacturing expertise.” Schaer points out that Jetrion is cutting edge from a technology perspective and recently announced plans for a new full-color UV inkjet label press. EFI will leverage the blended expertise it now has in inkjet, including superwide format and flexo/narrow web, as well as PSI Flexo, its print MIS optimized for this market, to expand market presence. As to why the Flint Group chose to divest this asset, Schaer adds, “I can't really speak for the Flint Group, but from our perspective, EFI can provide the support and resources Jetrion needs to grow from a technology standpoint. EFI is good at bringing new products to market and we have a strong history of investing in the R&D to do so. As an example, just last week we launched two brand-new VUTEk products, and we introduced a new Fiery XF production RIP to support the VUTEk line as well. We expect similar synergies with Jetrion.” Rita Conrad, Director of Corporate Communications for the Flint Group, echoed these sentiments, and said, “The timing was good for us, and it is a very good match for Jetrion. For the Flint Group, it strengthens our financial position at this particular time and allows us some additional capital for investment. And it is in keeping with the strategy for the Flint Group going forward. We are currently one of the largest suppliers of inks and printing supplies in the conventional printing marketplace, and that is where our focus lies. Both the printing industry and the ink industry are consolidating. The industry is changing—but we certainly don't think it is going away. We intend to be very strong in that arena.”