Advanced Vision Technology Closed $33 Million Buy of Pressroom Automation Leader Graphic Microsystems
Press release from the issuing company
HOD HASHARON, ISRAEL, October 2, 2007 -- Advanced Vision Technology (AVT), Ltd., a leader in automatic inspection solutions for printing applications, today entered the lucrative commercial and newspaper printing markets via its acquisition of Graphic Microsystems, Inc. (GMI), a leading manufacturer of pressroom automation equipment. The deal, in which AVT paid $33 million cash to Dover Diversified, Inc., a subsidiary of Dover Corporation, for 100% of GMI stock and certain intellectual property assets, closed successfully on October 1st, 2007.
AVT develops and manufactures automatic inspection solutions for print process control and quality assurance applications of packaging and label converting.
GMI is the world's premier supplier of closed loop color control (CLC) systems, color management and reporting software, and remote digital ink fountain control systems to leading commercial printers and press manufacturers worldwide. The company, which holds a major share of the CLC market, sells to commercial, semi-commercial, newspaper and specialty printers in the heat-set and cold-set web printing markets as well as printing press OEMs worldwide.
GMI's blue-chip customer base includes market leading companies serving the printing and press manufacturing industry, highlighted by its strong relationship with the world's top printers such as RR Donnelly & Sons Co., Quebecor World Inc., and Transcontinental Inc. Additionally, the company has relationships with leading press manufacturers such as Goss International, MAN Roland Druckmaschinen AG, Koenig & Bauer AG (KBA), Komori Corp., Nilpeter, Dauphin Graphic Machines Inc. (a subsidiary of Manugraph India Ltd.), Timsons Printing Machinery and Muller-Martini AG.
Gary Wetzel, President and CEO of GMI, stated his strong support and confidence in the transaction, noting: "The strategic contribution of this deal to the newly merged company will be global market dominance and continued future growth."
Shlomo Amir, President and CEO of Advanced Vision Technology said: "Our healthy cash reserves, coupled with a positive 2-3 year outlook for the print market, meant now is the moment for us to take this strategic step. GMI's technology complements that of AVT, and its strong market presence in the web-offset commercial printing segment opens new markets to AVT's machine vision technology."
Amir noted that Dover Corporation, parent company of GMI, decided on the divestiture due to a shift in focus to larger businesses. "GMI's financials will be stated in our quarterly report, to be released on November 12, 2007." Their sales for the first six months of 2007 were $18.8 million, a 13% growth over the same period in 2006, with gross profit as a percentage of sales growing to 52.4% in the first six months of 2007 from 46.4% in 2006. EBITDA grew significantly to $3.109 million in 2007 from $1.086 million in 2006, or 16.5% of sales in the first six months of 2007 from 6.5% of sales in 2006. Throughout 2006, GMI reduced non-engineering overhead, resulting in an annualized savings of over $2 million, and improved product cost. In 2007, GMI also returned its field service division to profit.
Amir further noted that international sales comprise a significant part of GMI's sales, and are expected to account for 40% of revenue in 2007, with near-term expansion expected for Eastern Europe and long-term sights set for China and the Far East, once implementation of closed loop color control reaches a critical mass in those markets. "We expect that demand for machine vision, color automation, and other of our merged product lines will grow concurrently," he said.
Pro-forma consolidated figures of the newly merged company (excluding integration cost) for 2008, are expected to produce gross revenue of $68.8 million, yielding a 57% gross margin, EBITDA of 14%, and pro-forma EPS accretion of 12%.
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