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Xerox to Acquire XMPie; Includes WTT Analysis and comments from Kodak

Press release from the issuing company

Oct 4, 2006 -- (See analysis from WhatTheyThink.com at the end of this press release.) -- Building on the growth of personalized printing and multimedia direct marketing, Xerox Corporation has agreed to acquire XMPie for $54 million. A privately held company, XMPie is a leading provider of variable information software, which enables cross-media, personalized marketing programs. These programs combine communication outlets such as digitally printed direct mail, the Web, e-mail and other methods to reach customers with customized marketing materials that are relevant to the individual recipient and generate higher response rates. Based in New York, XMPie specializes in software that allows graphic designers, marketing companies and print providers to create marketing pieces with an individual's name along with information and images based on buying preferences and personal interests. In addition to creating targeted print communications like brochures, direct mailers, and catalogs, XMPie software can automatically generate related e-mails that drive customers to Web pages filled with information specifically designed for them. These integrated marketing campaigns rely on digital printing systems like the Xerox iGen3 Digital Production Press to produce customized, high quality marketing collaterals. The market for variable data printing that depends on software like XMPie to personalize applications is projected to triple in the U.S. at a compounded annual rate of 26 percent from $5.3 billion in 2004 to $16.6 billion in 2009, according to industry research firm InfoTrends. "As XMPie's largest reseller, Xerox has long served customers' growing demand for variable information software integrated with on-demand printing technology, Web and e-mail applications to create powerful marketing programs," said Ursula M. Burns, president, Xerox Business Group Operations. "Through this acquisition we are bringing the intelligence of data collection together with the quality of digital printing to provide complete, measurable solutions for multimedia marketing campaigns." XMPie will maintain its brand name and function as a standalone software unit, continuing to serve the entire graphic arts market and supporting current customers and business partners as well as Xerox. Jacob Aizikowitz will head up the unit, reporting directly to Burns. Aizikowitz is a founder of XMPie and has served as its chairman and chief technology officer since April 2005. Founded in 2000 and funded by Jerusalem Venture Partners, XMPie is a global operation with about 60 employees. XMPie will keep the company's headquarters in New York and its research and development facility in Netanya, Israel. The vast majority of XMPie employees are expected to join Xerox. Xerox's all-cash purchase of XMPie is expected to close in the next 30 days, subject to receipt of regulatory approvals and customary closing conditions. Through its acquisition strategy, Xerox is identifying successful companies in niche markets that align with Xerox's commitment to innovation, personalized service, and document management offerings. XMPie is Xerox's second acquisition this year. In July, Xerox acquired Amici LLC, a leading provider of electronic-discovery services, primarily supporting litigation and regulatory compliance. -------------------------- Analysis by Cary Sherburne, Senior Editor, WhatTheyThink.com Rumors from Israel published in The Globe on July 5th and picked up by various wire services have proven to be true after all. Yesterday, Xerox announced the acquisition of XMPie, a leading provider of variable information software, which enables cross-media, personalized marketing programs, for $54 million. In speaking about the acquisition in a media conference call, Xerox' Ursula M. Burns, president, Xerox Business Group Operations, to whom the wholly owned subsidiary will report, said, "XMPie has been a predominant Xerox partner. And other companies, like Kodak and HP, recognize XMPie's value as well. That is why it will be run as a standalone business to enable others to do business with XMPie in a comfortable way, similar to how Creo is structured with Kodak." In commenting about XMPie, Burns indicated she was impressed with the advanced nature and scalability of XMPie offerings, and is convinced the acquisition will bring greater value to partners and customers of both companies. She also announced that Eyal Goldwerger, currently CEO of XMPie, "has been a great help for us through this work so far, but he will retire from the company and will not be associated with XMPie after the close." Although XMPie has made progress with other partners, Xerox has remained the company's largest channel to market. Burns emphasized during the call that Xerox viewed the acquisition as not only good for Xerox and XMPie, but for the industry as a whole, and sees it as a step toward creating a de facto variable imaging standard, which she indicates is critical to the industry, especially the ability to scale the solution to meet the needs of smaller organizations. When asked about what the acquisition means for the newly formed XMPie Users' Group, Aizikowitz stated, "The XMPie Users' Group is an independent group with some relationship to XMPie, and it will continue to operate like that. It was established as a forum for users to interact with each other and to give us feedback, but it has a standing of its own. We believe it will enjoy even better support from XMPie following the acquisition." When queried about whether companies like HP and Kodak have expressed an opinion about continuing to do business with XMPie following the acquisition, Burns said, "I haven't spoken to those companies as of yet, and I can't really speak for them. But I do believe that in this industry you will find that there is comfort in this type of business arrangement. It will require a set of communication processes and practices to keep them comfortable. We will need to ensure that we have firewalls in place from both a customer and product perspective. XMPie products are world class, and I am confident they will continue to do business with XMPie." Burns indicated that XMPie offerings complement the rest of the variable data suite in Xerox FreeFlow. She said, "There are many different paths to the sea; one of the predominant paths is XMPie. The Xerox FreeFlow suite still needs rounding out and filling out. We will continue to do development inside of Xerox and inside of XMPie, and it will be accretive, so it is a case of 1+1 equalling 3. Now we will have less overlap and be more coordinated." Following the call, WhatTheyThink spoke with Kodak Graphic Communications Group CMO Jeff Hayzlett, who echoed Burns' comments by saying, "There are times where we compete and times when we cooperate, and this will be one of those times we cooperate. XMPie fits into our unified workflow solution. At the same time, we have other solutions that a printer might need that we will continue to develop and sell as well. Prinergy and Darwin are strong and have a good place in the market, and there are lots of different choices. As always, we will recommend what best meets the printer's needs and do what is best for the customer." Hayzlett added, "I am really happy that Jacob and his team have realized the entrepreneurial dream of building a product and a company and being able to sell it."