Saint Louis - Business and Technology News

HP Moves Into Digital Commercial and Industrial Printing Market with Acquisition of Indigo
by Bob Moore, Editor
© 2001 St. Louis Front Page

CHICAGO, IL, (SLFP.com), Sept 7, 2001 - On the heals of a major deal with the acquisition of Compaq Computer, Hewlett-Packard Company announced Thursday that it will acquire Indigo, N.V., a leader in high performance digital color printing systems.

Indigo is a $200 million business, whose versatile liquid electro-photography (LED) technology spans commercial printing, industry printing and photo-finishing. Upon completion of the transaction, Indigo will operate as a new division within HP's Imaging and Printing Systems business. The companies discussed the new relationship during a press conference on opening day at the Print 01 trade show at McCormick Hall in Chicago.

"Often when companies merge or where there is an acquisition, they look for things called synergy, an euthenism for redundancy or where things overlap," stated Benny Landa, Indigo founder, chairman and CEO. "That's not what I mean when I say synergy. This is a case where there is no overlap. This is a case of a handmade-glove fit, both technologically and commercially in terms of management strength."

Landa noted that his vision has always been to lead the printing industry into the digital era and see Indigo technology pervade the commercial printing market. The company currently has 1100 employees and is headquartered in The Netherlands. It has R & D and manufacturing operations in Israel. "We will restructure the focus of our resources. Our R & D staff will now be backed by their R & D compatriots in the U.S. and in other parts of HP as being a world-wide operation bringing products to market," he stated.

The acquisition of Indigo strengthens HP's $20 billion Imaging and Printing business in the emerging $400 billion market poised for a digital transformation. "We continued to be a cutting edge company," Landa told SLFP.com after the press conference. "But, in the battle of the giants, your best interests aren't enough and you need an arsenal and resources and people and market reach if you are really going to win the war and not just be successful in a skirmish."

"In the beginning it was easy, nothing compared to what it's going to be like now with major competitors like Heidelberg and Xerox. We want to lead this market," Landa emphasized. "Now, as part of HP, we think that goal is near certain."

The trade show, which attracts nearly 90,000 people world-wide, provided Indigo with an opportunity to unveil its latest Digital Offset Color presses, the Platinum and the Publisher 4000. The Publisher 4000 is a twin-engine web-fed press that delivers the power of Indigo Digital Offset Color printing to the mid-volume commercial printing, publishing and direct mail markets at speeds of 4000 4-color A3 images per hour, or 136 letter-size pages per minute, on even the lightest-weight paper stocks.

Representatives of Indigo and members of the press gathered in the 15,000 square foot pavilion on opening day of the Print 01 trade show for the announcement of HP's acquisition of Indigo. © Bob Moore, SLFP.com.

In addition, Indigo's digital photo studio at Print 01 showcased the six-color Photo-e-Print. Show participants enjoyed an opportunity to have their picture taken and see the results with a 12"x18" portrait of breathtaking photographic quality in seconds from flash to print. Indigo's expansive pavilion also included a 100-seat theater offering live hourly presentations.

Under the terms of the agreement, HP will offer to acquire all of the outstanding equity of Indigo not already owned by HP in exchange for a combination of shares of HP stock and non-transferable contingent value rights (CVRs) entitling the holder to a contingent cash payment based on Indigo's achievement of revenue milestones. In exchange for each share of Indigo stock, shareholders of Indigo will receive either $7.50 in HP common stock, or $6 in HP common stock plus one CVR entitling its holder to a cash payment of up to $4.50 per share if Indigo achieves a total of $1.6 billion in revenue over a three-year post-closing period. The value of each CVR increases linearly from $0 to $4.50 as cumulative revenues increase from $1.0 billion to $1.6 billion.

The exchange represents a deal valued at approximately $629 million in HP common stock (based on the closing price of HP shares on September 5, 2001) as well as a maximum contingent cash payment of approximately $253 million.

See related story: HP and Compaq Merger Creates $87 Billion Company

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