January 27, 2003 -- (by Gail Nickel-Kailing with WTT staff) -- On January 23, Creo filed SEC Form 4 – Statement of Changes in Beneficial Ownership – formally announcing the acquisition of Printcafe shares. Signed by Tran Chung, Manager of Creo SRL, Amos Michelson, CEO of Creo, and Judi Hess, President of Creo’s Graphic Arts division, the form indicates that as of January 21, Creo SRL had acquired 2,610,112 shares for $1.30 each. The initial report gave the total shares owned by Creo SRL as 5,814,195, which was adjusted to 5,795,607 by a Form 4-A, filed on January 24. WTT Analysis: So what does this mean? Creo’s goal was to reach a comfortable majority position in Printcafe and then proceed with an offer to acquire all of the company. The strategy to reach majority ownership would most likely fend off potential competitors from bidding on Printcafe. However, now EFI has made an offer for all outstanding shares for $2.60 per share. Is it too late for the shareholders mentioned in the filing above to change their mind and take the higher price from EFI and thereby increase EFI’s chances of acquiring the company? According to the legal eagles, the agreement by these Printcafe shareholders to sell their shares to Creo is somewhat similar to an agreement to sell a house. The seller formally accepts the offer from the buyer, and a certain amount of time lapses before the sale is officially “closed,” recorded, and money changes hands. In the sale of property, the prospective buyer has time to inspect the property, and research the title and any other potential legal hurdles. The buyer can cancel the agreement for no cause by forfeiting any “earnest money” paid to the seller. The seller has fewer options in voiding the contract and certainly cannot back out because someone offers a higher price than that agreed on. In the instance of the agreements between Creo and the Printcafe shareholders, it is not clear what legal recourse the sellers have, if any, resulting from the EFI offer. We have been told that the shareholders who made those agreements with Creo are examining their legal options to receive the better price. In the end, the transaction is done on paper and this filing moves that process further along. But the shares have not been officially given to Creo and Creo has not literally paid for those shares... yet. --- Editor’s Note: See more analysis of this Creo filing as well as interviews with Joseph Cutts, CFO of EFI and Rochelle van Halm, Media Relations Manager at Creo. Premium Access Members can view this report by visiting www.whattheythink.com