US$180 Million Deal Secures Pantone For X-Rite

X-Rite, the provider of colour systems for measuring, formulating, matching and simulating colour, has entered in to a definitive agreement to buy Pantone for US$180 million.

The deal is expected to be completed this autumn.

Pantone will become a new business unit within X-Rite, whilst Pantone's current management will continue to play key roles in the new organisation.

X-Rite said that the anticipated strategic, operational and financial benefits of the acquisition include the deepening X-Rite's product range by adding Pantone's colour standards to its hardware, software and services.

The company also believes it can exploit its global presence and distribution capabilities to expand the reach of Pantone's colour products.

Revenue-generating opportunities for X-Rite can be enhanced, whilst the company further diversifies its revenue base amd will be able to accelerate technology and business model innovation with what it described as significant synergies in marketing, operations and administration.

Pantone, with its Matching System for identifying, matching and communicating colours to solve colour reproduction problems in the graphic arts market.

Pantone has expanded its colour matching system to other industries where accurate colour reproduction is critical.

Revenue of approximately US$42 million in 2006 with adjusted earnings before interest, taxes, depreciation and amortisation of approximately 27 per cent of revenue, were recorded by Pantone.

Pantone sells its products, services and technology directly and through licensees in over 100 countries.

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 US$6.5 million of annual operating expense cost savings associated with the transaction in the second year.

During the first year, the company expects to incur cash restructuring costs of approximately US$5.5 million.

Tom Vacchiano, chief executive officer of X-Rite, said: "Larry Herbert and his team have built Pantone in to a very successful business and we are delighted that it will now be part of the X-Rite family.

This iconic brand is the perfect complement to X-Rite's business bringing Pantone's expertise and market position in colour communication and standards to our colour systems.

We believe that this strategic acquisition will provide value for our shareholders, customers, employees and partners." And he explained: "We have proven expertise in integrating sizable, strategic acquisitions in to our business.

We are confident that we can successfully blend the Pantone integration with our existing responsibilities as we evolve in to a faster growing, more diverse business." Larry Herbert, chief executive officer of Pantone, responded: "Pantone and X-Rite have enjoyed a strategic partnership in providing colour management systems for the digital imaging market for the last two years.

Our company is wholly committed to colour communication and inspiration and we are enthusiastic about combining our growing business with X-Rite to apply even greater resources to this work." The transaction will be funded exclusively with cash, which will be financed through new borrowings.

Merrill Lynch, Fifth Third Bank, National City Bank, LaSalle Bank and Goldentree Asset Management, LP have committed to a total debt package of up to US$415 million to fund the transaction and refinance X-Rite's existing debt.

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