X-Rite aquires Pantone

Pantone, headquartered in Carlstadt, New Jersey, USA, is the creator of the Pantone Matching System for identifying, matching and communicating colors to solve color reproduction problems in the graphic arts market. The company has expanded its color matching system into other industries where accurate color reproductions are critical, including digital technology, fashion, home, plastics, architecture and contract interiors and paint. According to a press release, Pantone reached total sales of approximately US-$ 42 million in 2006 with earnings before taxes (EBITDA) of approximately 27 percent of revenue. The company sells its products, services and technology directly and trough hundreds of licensees in over 100 countries.

With the acquisition, X-Rite expects to deepen its range of offerings by adding Pantone’s color standards to its range of hardware, software and service solutions and to leverage its global presence and distribution capability to expand the reach of Pantone’s color solutions. The transaction is expected to be accretive to X-Rite’s cash earnings per share during year two of the combined operations. The company expects to achieve approximately US-$ 6.5 million of annual operating expense cost savings associated with the transaction within the same timeframe. During the first year, X-Rite forecasts cash restructuring costs of approximately US-$ 5.5 million.

Upon the finalization of the acquisition, Pantone will become a new business unit within X-Rite. The current leaders of the company will continue to play key roles in the organization.

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 Golden Tree Asset Management, LP have committed to a total debt package of up to US-$ 415 million to fund the transaction and to refinance X-Rite’s existing debt.