X-Riteorated has entered into a definitive agreement to purchase Pantone for $180 million. The deal is expected to close in the autumn of 2007.
Pantone is best known for its Pantone Matching System of swatches and inks that allow designers to guarantee colour accuracy when jobs are sent to printers, though it also produces colour management systems - and has expanded its colour matching system to other industries including fashion, home, plastics, architecture and contract interiors, and paint.
Pantone generated revenue of approximately $42 million in 2006 with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately 27 per cent of revenue.
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 $6.5 million of annual operating expense cost savings associated with the transaction in year two. During the first year, the company expects to incur cash restructuring costs of approximately $5.5 million.
Pantone will become a new business unit within X-Rite. Current Pantone leaders will continue to play key roles in the organization.
This 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 $415 million to fund the transaction and refinance X-Rite's existing debt.
The transaction is expected to close in the autumn of 2007, subject to regulatory approvals.