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X-Rite Completes Acquisition of Pantone

Press release from the issuing company

Grand Rapids, Michigan, October 24, 2007 - X-Rite, Incorporated a leading provider of color solutions for measuring, formulating, matching, and simulating color, announced today it has completed the purchase of Pantone, Inc. for a purchase price of 180 million dollars.  The transaction was funded exclusively with cash, financed through new borrowings.
Pantone, Inc., headquartered in Carlstadt, New Jersey, is the worldwide market leader in color communication and specification standards in the creative design industries.  Its flagship product, the PANTONE MATCHING SYSTEM, is the de-facto color standard in the graphic arts, printing, publishing and advertising industries.  The company also provides color standards and design tools for the fashion, home furnishings, architecture, paint, interior and industrial design industries.  Pantone generated revenues of approximately $42 million in 2006 with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately 27% of revenues.
Anticipated strategic, operational and financial benefits of the acquisition include:
• Deepening X-Rites range of offerings by adding color standards to its leadership position in hardware, software and services solutions 
• Leveraging X-Rites global presence and distribution capabilities to expand the reach of Pantones color solutions
• Enhancing X-Rites revenue generating opportunities and further diversifying its revenue base
• Accelerating technology and business model innovation
• Achieving significant synergies in marketing, operations and administration
The transaction is expected to be accretive to X-Rites cash earnings per share during year two of the combined operations.  X-Rite expects to achieve approximately $6.5 million of annual operating expense cost savings associated with the transaction in this time period.  During the first year, the company expects to incur cash restructuring costs of approximately $5.5 million. 
"We are very excited to welcome Pantone into the X-Rite family," stated Tom Vacchiano, X-Rites CEO.   "We expect the combination of our two businesses to further strengthen X-Rites position as the markets leading and most comprehensive color management solutions provider.  The grouping of our broad technology platforms and standards and an expanded customer base should help us further several of our strategic objectives, including driving innovation and growth and further diversifying our business."
Organization of the Combined Entity:
Pantone will become a new business unit within X-Rite.  Current Pantone leaders will continue to play key roles in the organization.
This transaction and refinancing of X-Rites existing debt was financed through a new debt package totaling $415 million provided by Merrill Lynch, Fifth Third Bank, National City Bank, LaSalle Bank and GoldenTree Asset Management, LP. 
X-Rite was advised exclusively by Headwaters MB for investment banking and financial advisory services, including securing debt financing.  McDermott Will & Emery provided legal counsel to X-Rite.  Goldman, Sachs & Co. served as exclusive financial advisor to Pantone and Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel to Pantone.