Scitex (SCIX)

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HP buying Scitex Vision for $230 million cash
14.8.2005 / 13:30
Ami Ginsburg

With the Associated Press

After almost a year of negotiations, Hewlett-Packard Co. said Thursday it will acquire most of the assets of Scitex Vision, for $230 million in cash. HP is buying the company from Scitex Corporation (Nasdaq:SCIX).

The move is designed to expand the HP's printing business into the wide-format digital printers that Scitex Vision makes.

Minus Scitex Vision's roughly $24 million debt, the Scitex shareholders should be receiving between $205 million to $210 million, our of which $24 million will be placed in trust until certain milestones are reached.

Scitex first reported the putative transaction about half a year ago, but signature only arrived last week.

The main beneficiary of the transaction is Scitex, which owns 77% of the subsidiary, or 70.6% at full dilution. Scitex commented that it expects to realize between $110 million to $110 million after tax and various payments related to the transaction, but before distribution of the money to be held in trust. Its capital gains should be in the range of $75 million to $95 million.

Scitex's controlling shareholders, the two IDB (TASE: IDBH) group companies Discount Investment Corporation (TASE: DISI) and Clal Industries and Investments (TASE: CII ), each of which owns 7.2% of Scitex Vision (6.6% at full dilution), will each be reporting capital gains in the range of NIS 120-150 million.

Scitex Vision management and workers own 10% of the company's stock.

Among other things, HP gains full rights to the Scitex brand name. Subsequent to the transaction, therefore, Scitex will be changing its name.

The deal will help HP build upon its existing business of supplying large-format printers and presses. Scitex Vision specializes in printers for signs and industrial applications, including billboards, banners, street advertising and packaging.

Today, about 17% of such printing is done digitally - a number that's expected to double in five years, said Rich Raimondi, vice president of U.S. commercial sales at HP's Imaging and Printing Group. "It's a key part of our growth strategy to move into markets that are moving from analog to digital processes," he said.

Once the deal is concluded in about 90 days, Scitex will remain devoid of activity, aside from a few negligible holdings, but with a lot of cash. A year ago it gave shareholders $86 million in dividends. A year ago it sold another division, Scitex Digital Printing, to Kodak for $272 million, and in 2000 it had sold its preprinting operations to Creo of Canada.

Netanya, Israel-based Scitex Vision had revenue of $142 million for the year ending June 30 and has principal subsidiaries in the United States, Belgium, China, Mexico and South Africa. It has a presence in 75 other countries as well.

"Our technology will reach a broader audience as it becomes available more widely," said Dov Ofer, Scitex Vision's CEO. "And employees will enjoy professional opportunities as the business grows within a leading global organization.

The transaction is expected to close within 90 days, provided closing conditions are met. Scitex Vision will be integrated into HP's Imaging and Printing Group.

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