Scitex to Sell SDP Business to Kodak for $250 Million
Press release from the issuing company
November 26, 2003 -- Scitex Corporation announced today that Eastman Kodak Company and Scitex have signed a definitive agreement under which Kodak will acquire the assets and business of Scitex Digital Printing, Inc. (SDP), a wholly-owned US subsidiary of Scitex and a leader in ultra-high-speed digital printing technology, for $250 million in cash at closing. In addition, as part of the transaction, Scitex will retain $12 million of SDP's expected $22 million cash balance at closing, producing a total cash consideration for the transaction of $262 million.
Kodak anticipates Scitex Digital Printing's operations to add approximately $190 million in revenue in its first full year as a wholly owned Kodak subsidiary. Kodak also expects the acquisition to be slightly dilutive in the first full year and to add to earnings thereafter.
Through the acquisition, Kodak will have the industry-leading patent portfolio for continuous inkjet printing technology, which will provide the company with greater ability to innovate in the inkjet industry. SDP employs 733 people and had reported sales of $157 million in 2002. Reported sales revenues through the third quarter of 2003 were $128 million with operating income of $12 million.
"We are moving decisively to implement our growth strategy by expanding into a range of commercial digital businesses," said Daniel A. Carp, Chairman and Chief Executive Officer, Eastman Kodak Company. "One part of that strategy is to acquire in a disciplined manner companies and technologies that complement our existing businesses, capabilities and assets. The acquisition of Scitex Digital Printing is a prime example of how we intend to build upon inkjet technology developed on our own to build business in growing market segments.
"This is the first of several actions Kodak will take to expand our participation in the digital commercial printing industry," Carp continued.
With its NexPress joint venture, Kodak is well represented in the on-demand, high-quality color printing segment, based upon electrophotography technology. The acquisition of Scitex will provide Kodak with additional capabilities in the transactional printing and direct mail sectors.
Additionally, Scitex Digital Printing provides Kodak another path to commercialize its proprietary inkjet technology. Kodak intends to incorporate its unique inkjet technology, workflow solutions and color science into future Scitex Digital Printing systems to broaden the range of applications that these machines can fulfill.
"We plan on combining Kodak's proprietary inkjet technology with Scitex Digital Printing's proven printing platform to create a low-cost system that will deliver very high print quality at extremely high speeds," said Kodak's Langley. "This will open new opportunities for us and provide customers with faster, better and less costly solutions for their variable data printing needs."
Commenting on the transaction, Mr. Nachum "Homi" Shamir, President and CEO of Scitex Corporation and Scitex Digital Printing said: "We believe this transaction creates significant value for Scitex's shareholders, in the spirit of our public statements since the appointment of the new leadership at Scitex and the realignment of our board to reflect the new ownership of IDB Group. Kodak is a terrific strategic fit for SDP and I am very excited about the future of this business under Kodak's stewardship."
Mr. Ami Erel, Chairman of Scitex Corporation, stated: "I am extremely pleased with the transaction, which I believe will prove beneficial for Scitex and its shareholders. Mr. Shamir has done an excellent job and is intended to remain CEO of Scitex until the closing of the transaction. Scitex will continue, following the transaction, to own significant assets, and we will strive to lead Scitex to a successful future and to further enhance shareholders’ value."
Mr. Avi Fischer, Deputy Chairman of IDB Holding Corporation Ltd., Co-CEO Clal Industries and Investments Ltd. and a member of Scitex's Board, added: "We are thrilled with this value-creating transaction. It represents exactly the type of focus we put on shareholder value and dynamic repositioning of assets. This transaction demonstrates the talent of Scitex management and is a terrific achievement for the company’s leadership.”
Under the terms of the purchase agreement, Kodak will acquire from Scitex all the assets of SDP and certain subsidiaries of Scitex that are involved in SDP's business and assume substantially all of SDP's liabilities. $10 million of the proceeds will be retained for up to two years in a special account to cover any possible indemnification claims. Additional funds will be held in an account in the U.S. to be used to satisfy obligations to the IRS. Closing of the transaction is subject to customary regulatory approvals and other customary closing conditions and pending these, the transaction is intended to be completed as soon as all required approvals have been obtained.
Mr. Shamir and the management team of SDP are then expected to join Kodak's management and continue to lead the business under the Kodak corporate structure. Shamir will report to James Langley, President, Commercial Printing, and Senior Vice President, Eastman Kodak Company.
Scitex is reviewing the accounting and tax consequences of the transaction, but currently estimates that it will recognize a capital gain (net of taxes) in its financial statements in the range of $50-70 million.
Scitex Corporation continues to hold a majority shareholding in Scitex Vision (Aprion) that develops, sells and supports wide format drop-on-demand imaging devices. Scitex also has equity interests in a number of entities, including significant stakes in Jemtex Ink Jet Printing Ltd. and Objet Geometries Ltd.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.