X-RITE COMPLETES ACQUISITION OF PANTONE
Expands portfolio of hardware, software, services and standards in the color industry
Grand Rapids, Michigan, October 24, 2007 - X-Rite, Incorporated (Nasdaq: XRIT) 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-Rite’s range of offerings by adding Pantone’s color standards to its leadership position in hardware, software and services solutions
- Leveraging X-Rite’s global presence and distribution capabilities to expand the reach of Pantone’s color solutions
- Enhancing X-Rite’s 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-Rite’s 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-Rite’s CEO. "We expect the combination of our two businesses to further strengthen X-Rite’s position as the market's 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-Rite's 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.
For Further Investor Information:
Mary E. Chowning
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(NASDAQ: XRIT) X-Rite is a global leader in color measurement and color management, offering hardware, software and services for measuring, formulating and matching color. The Company serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical. X-Rite serves customers worldwide from its offices in Europe, Asia and the Americas. Visit X-Rite’s website at www.xrite.com for more information.
Pantone, Inc. has been the world’s color authority for more than 40 years, providing design professionals with products and services for the colorful exploration and expression of creativity. Always a source for color inspiration, Pantone now offers paint and designer-inspired products and services for consumers. More information is available at www.pantone.com.
Forward Looking Statements
This release contains forward-looking statements based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, the risk that X-Rite’s and Pantone’s businesses will not be integrated successfully; the challenges of integration and restructuring associated with the transaction or other acquisitions, and the challenges of achieving anticipated synergies; costs related to the transaction; the possibility that the market for the sale of certain products and services may not develop as expected; X-Rite’s ability to manage its international operations; the existence or enactment of adverse U.S. and foreign government regulation; the risk that the development of products and services may not proceed as planned; adverse general domestic and international economic conditions including interest rate and currency exchange rate fluctuations; the difficulty of efficiently managing the company’s cost structure for capital expenditures, materials and overhead, as well as operating expenses such as wages and benefits due to the vertical integration of the company’s manufacturing processes; the possibility that the transaction or other contemplated acquisitions may not close; the impact of competitive products or technologies and competitive pricing pressures; potential business disruptions; the economic downturn in the U.S. or other world economies; and other risks that are described from time to time in X-Rite's Securities and Exchange Commission reports. Readers of this release are cautioned not to place undue reliance on these forward-looking statements, since, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this release. We undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.