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EFI Acquires Alphagraph; Commentary by Cary Sherburne

Press release from the issuing company

Electronics For Imaging, Inc., a world leader in customer-focused digital printing innovation, today announced that it has acquired privately-held alphagraph team GmbH ("Alphagraph "). Alphagraph, with headquarters in Essen, Germany, is a provider of MIS/ERP (management information systems and enterprise resource planning) software products for the printing industry, including Prinance, Printy and Primus. While financial terms of the acquisition were not disclosed, the acquisition is not expected to be material to EFI's 2011 results.

Despite the challenging environment EFI has shown solid growth in Europe, and with the addition of Alphagraph we are accelerating our investment in staffing levels and footprint in the European market, said Paul Cripps, managing director of EFI EMEA. “With the Alphagraph team and customers, we will continue to build upon the strength of our business, and the support we make available to our increasing number of customers in Europe.”

Alphagraph is very enthusiastic about the opportunity to join EFI, as they have demonstrated that they are the clear leader in business process automation software for printing companies,” said Norbert Hotze, Founder of Alphagraph. “It is a natural fit for our client base and we look forward to introducing them to EFI’s overall support structure and portfolio of solutions.”

Alphagraph will become part of EFI's Software Applications (APPS) portfolio, which generated 44% revenue growth during the first 9 months of 2011.”

EFI intends to integrate support and operations of Alphagraph into the existing APPS organisation, which will continue to sell the EFI PrintSmith, EFI Pace, EFI Monarch and EFI Radius software products to the industry while continuing to support the existing Alphagraph client base.

“I am very excited by the addition of Alphagraph and their team to EFI.  We welcome Karsten Thomas, now Director EFI Alphagraph and all our new Alphagraph partners.  This relationship will allow us an even greater focus on providing the industry a strong and long term print management product portfolio with the benefit of the Alphagraph team, one of the strongest teams of development, support and implementation staff in Europe”, said Marc Olin, GM of EFI’s Software Applications (“APPS”) business unit.

Alphagraph solutions including Prinance, Printy, Web.Connect, Shop.Connect, Kreativ.Connect and Stratos i. Point will continue to be developed, supported and sold for existing customers, but no longer be offered to new customers. EFI will continue to focus on the following MIS/ERP systems for sales to new clients going forward:

  • EFI Monarch – for larger, single and multi-plant operations looking for full workflow automation with specialization in publication, book, direct mail, transactional and large commercial printing operations
  • EFI Radius – for labels, folding cartons and flexible packaging operations
  • EFI Pace – for mid-market digital, offset, hybrid, wide format and specialty printing operations
  • EFI PrintSmith – for on-demand, copy shop and small commercial operations
  • EFI Digital StoreFront –Customizable Internet-Based eCommerce/Web-to-print Platform

EFI will continue to provide long-term support for customers using Alphagraph for many years into the future.  Georg Hollenbach, Managing Director of EFI GMBH will assume the Managing Director role for Alphagraph going forward.

Alphagraph products are currently used in over 6,000 facilities in 15 countries.

Commentary from Cary Sherburne

In an interesting confluence of serendipity, two print MIS acquisitions were announced yesterday, with HP acquiring HiFlex and EFI acquiring German-based Alphagraph. WhatTheyThink was able to speak with EFI yesterday and is in the process of contacting HP for more information on its MIS acquisition strategy – stay tuned.

Alphagraph will become part of EFI's Software Applications (APPS) portfolio, which generated 44% revenue growth during the first 9 months of 2011. Alphagraph, with headquarters in Essen, Germany, is a provider of MIS/ERP (management information systems and enterprise resource planning) software products for the printing industry, including Prinance, Printy and Primus.

As with previous acquisitions, EFI plans to continue to support, maintain and update Alphagraph’s current products for the next five years or so, but has an ultimate goal of migrating customers to its core portfolio of products as they begin looking for replacement MIS systems, providing financial incentives for them to do so as well as build the ability for them to migrate their data.

In terms of people, Olin says, “There are two primary reasons why we purchased Alphagraph, for its customers and its people. It wasn’t for the product portfolio because we won’t be selling those long term. A key objective for our expansion in Europe was to have people who were capable of deploying and supporting our products there. The Alphagraph team is perfect. They have a large team in Germany with many years of experience, and our goal is to try to retain as much of the staff as possible to both continue to develop and support existing products, as well as to implement and support our core product suite in Europe.”

We asked Olin whether EFI was still on the MIS acquisition trail and wondered who was left with HiFlex and Alphagraph now off the table. His response: “There are dozens if not hundreds of MIS providers out there around the planet, and still some decent sized firms left, with revenues in the millions and maybe even approaching $10 million. We have informed the investment community that we want to continue to purchase MIS companies over the next couple of years, ideally at the rate of one per quarter if the right opportunities present themselves at the right price.”

This acquisition brings EFI’s MIS installed base worldwide to about 20,000, which Olin claims is 10X to 20X its largest competitor.

Among the 20,000 is Heidelberg’s Prinance installed base. Although Heidelberg discontinued selling Prinance earlier this year following its acquisition of MIS provider Cerm, there is still a large Heidelberg installed base using the software. Olin indicated, “Those customer relationships belong to Heidelberg, and we will continue to support them through Heidelberg. It will be up to Heidelberg and their customers how they wish to proceed. Of course, if any of those companies approach us directly, we will be happy to do business with them.”

When asked how this acquisition compared with the HiFlex acquisition by HP, Olin commented, “Prinance has many times the number of customers that HiFlex does, the largest installed base of any product in Europe, probably by a factor of five, at least.”

He concluded by saying, “This is not the first acquisition, obviously, and won’t be the last. We are committed to growing our worldwide business and certainly Europe is a critical piece of that. My goal is to make our European business as large as our U.S. business. We have a way to go, but we think the opportunity is there to achieve the same type of marketshare we have in the U.S.. Alphagraph has a great customer base and has had good products for many years. We are looking forward to having their team as part of EFI.”


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