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Thursday, June 16, 2005 12:38:25 PM
M&A negotiations HP have stalled. But why?
Gitit Pincas 16 Jun 05 19:12
As first reported by "Globes," HP's negotiations to acquire Scitex Vision for $240 million have fallen by the wayside. Scitex Vision is now moving into high gear for an initial public offering.
The sale of Scitex Vision, a subsidiary of Scitex (Nasdaq:SCIX; TASE:SCIX)and part of the IDB Group, is not off completely, but chances are slim that it will go through. In other words, only if the unexpected happens will the gap between the two companies be bridged.
One possible scenario is that Scitex Vision's planned IPO is merely a tactical move as part of its unending negotiation with HP. However, it appears that the IPO idea is real.
In any case, "Globes" has learned that Scitex Vision, which sells wide-format printers and ink, is due to close its list of underwriters so that the flotation can go ahead as soon as investors return from their summer vacations.
Investment houses that are likely to be on the list include UBS, Citigroup, William Blair & Co., and CIBC, but a short list has not yet been formulated.
Scitex's spokesman said in response to a question from "Globes" that the company does not comment on rumors. "When there is concrete information, we will make an announcement in the accepted manner," he said.
Scitex's market capitalization is $240 million, exactly the value at which HP was due to buy the company.
Scitex owns 75.5% of Scitex Vision (68.5% on a fully diluted basis). The other shareholders are Clal Industries and Investments (TASE:CII), which owns 24.7%; Discount Investment Corporation (TASE:DISI), which owns 24.4.%; Suny Electronics (TASE:SUNY), which recently increased its stake to 10.9%; Mivtach Shamir Holdings (TASE:MISH) -- 5.5%; and Ilanot Discount -- 1%.
Why did negotiations with HP break down? After all, the acquisition was agreed on in principle as of March.
Sources point to a combination of factors, including internal disputes at HP about the way to merge, how necessary Scitex Vision was to HP, and matters pertaining to Scitex Vision's ink business.
The most significant factor was apparently the price, which recently became the main bone of contention.
With every passing quarter, Scitex Vision continues to improve, posting handsome profit margins. Scitex Vision's shareholders apparently wanted more than $240 million, and believe that an IPO will bring in more money.
Moreover, Electronics for Imaging (EFI) recently acquired Vutek, a competitor of Scitex Vision, for $281 million.
Published by Globes [online], Israel business news - www.globes.co.il - on Thursday, June 16, 2005
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