EFI eyes next stage of evolution after $1.7bn sale

By Darryl Danielli, Tuesday 16 April 2019

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EFI is poised to be acquired by a US private equity firm in a deal that values the wide-format kit manufacturer and productivity software developer at $1.7bn.

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Muir: EFI is positioning for its next chapter of evolution

The proposed all-cash purchase by an acquisition vehicle of Siris Capital Group was confirmed yesterday (15 April) and once completed EFI will delist from Nasdaq.

Speaking to PrintWeek last night, EFI chief executive Bill Muir said: “In many different ways it’s an endorsement of the great company that has been built through the years and the potential it continues to have.

“It’s also recognition that some of the businesses under the EFI umbrella have different characteristics: our Fiery business is a bit mature and doesn’t have the same growth trajectory as something like our Nozomi [packaging] or Reggiani [textile] businesses.

“Sometimes in the public market it becomes a little difficult to appropriately characterise and value companies with that level of disparity under one roof.”

Under the terms of the definitive agreement, Siris will pay $37 per share, which is a circa 45% premium on EFI’s 90-day volume-weighted average price and a 26% premium on the closing price prior to the deal being announced.

While the sale was unanimously approved by the EFI board, the company has now entered a 45-day 'go-shop' period where EFI’s advisors can approach other potential suitors to ensure the deal offers the best value to shareholders. If its offer is bested in that process, Siris will have the opportunity to make an improved offer.

Once the go-shop process is complete, EFI will convene a special meeting “as soon as is practicable” where shareholders will be able to vote on the proposal.

Marc Olin, EFI chief financial officer, said that in investor calls following the sale announcement shareholders had welcomed the news.

Subject to the go-shop and usual regulatory approvals and closing conditions, the deal is expected to complete in calendar year Q3.

Siris co-founder and managing partner Frank Baker said: “We believe that, by partnering with Siris, EFI will be well positioned to capture this transformational opportunity associated with increased digital inkjet penetration, industrial automation and software enablement.

“We are eager to partner with management to help the company achieve its strategic objectives.”

Siris specialises in supporting mature technology companies that have a strong legacy business but are looking to their next growth phase. It was founded in 2011, has so far raised $5.9bn and currently has eight companies in its portfolio.

Muir said that the deal to take EFI private won’t automatically mean further M&A activity or divestiture of some business units, but instead “drives the business a little out of a 90-day cycle and a bit more into long-term value creation”.

“One of the things of being in the public eye is that you have a very refined focus on a 90-day window. Which tends to prioritise growth over operational and financial metrics.

“[Being a private company] causes a little more rightful focus on exceptional product development and developing solutions that are really meaningful for customers.”

Muir hinted that the deal would also allow the business to make more longer-term strategic decisions across the entire business.

“Our company is a great company, but there is some hard work to be done on positioning it for its next chapter of evolution. We’ve done some work on our go-to-market approach, but there’s more to do there, there are things we want to do in terms of continuing to accelerate innovation in the business, there are also areas of synergy we believe in supply chain and innovation across our industrial inkjet business.

“Some of that transformational work is hard to do when you’re trying to pinpoint numbers in a near-time window. I think this gives us an opportunity to do some of that difficult lifting outside of a 90-day pressured window.”

Muir wouldn’t be drawn on how long the deal had been in the offing nor on who approached who.

“But it’s fair to say that there has been a level on interest in EFI for some time,” he said.

EFI was founded by Efi Arazi in 1989, generating sales of $2m in its first year. In 2018 the company broke the $1bn sales barrier in the same year that Muir took over as CEO from Guy Gecht, who had headed the business for the previous 18 years.

EFI shares closed at $38 following the announcement, an 18-month high.

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