Printronix Sold to Private Equity Firm

By Claire Swedberg

Oct. 3, 2007—RFID and bar-code label manufacturer Printronix is being acquired by Vector Capital, a private equity firm based in San Francisco, at a price of $108 million. The deal will close at the end of the year, Printronix's president and CEO, Robert Kleist, announced at a news conference yesterday. Vector Capital specializes in buyouts, spinouts and recapitalizations of established technology businesses.

At the news conference, Kleist revealed the company had organized a committee of independent directors representing shareholders that had been examining acquisition opportunities for the past two years. The committee ultimately recommended the sale to Vector Capital, he said, adding, "The board of directors is acting on unanimous committee approval." Shares were priced at $16 apiece, representing an 18.3 percent premium over the closing price of Printronix shares on Oct. 1.

David Sakai, Printronix senior VP of worldwide marketing

Vector Capital previously owned RFID systems provider Savi Technology, which it sold to Lockheed Martin in 2006. "Their experience with Savi was very impressive," says David Sakai, Printronix's senior vice president of worldwide marketing. In 2006, Vector sold business software provider LANDesk Group to Avocent for $416 million. Given Vector's record, Sakai says, he has high hopes for Printronix and its products. "I'm very excited about the outlook for RFID."

On the other hand, Kleist said at the news conference, RFID adoption has not met expectations to date, indicating the technology is still generally in the piloting phase, and that there has not been the rapid acceleration some industry watchers may have anticipated. "RFID in the supply chain has not met the industry's expectations for growth," he stated. "Our RFID revenue has plateaued. The acceleration of the Wal-Mart market has not been what was hoped."

The day after the conference, Sakai explained that sales of Printronix's RFID hardware is seeing growth in the produce market and government sector, as well as in closed-loop supply chain applications. "RFID got off to a pretty good start and then leveled off," Sakai says. "However, we are still continuing to do pilots, continuing to do testing."

Printronix does not break out sales of its RFID products, but instead includes RFID-related revenue as part of its thermal-printing technology business. In fiscal year 2007, thermal-printing technology accounted for 19.1 percent of annual sales, or $24.5 million, representing an increase of 5.6 percent over fiscal year 2006.