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Printronix Sold to Private Equity Firm

The maker of RFID and bar-code printers and encoders expects the purchase will help it grow its RFID sales, according to the company's senior VP of marketing.
By Claire Swedberg
Several regulatory requirements must be completed before Vector can close the purchase. Printronix's four manufacturing sites must undergo environmental studies, which Kleist estimates will take two to three weeks. The company must also make $18 million available in cash, said Printronix's CFO, George L. Harwood, who also spoke at the news conference. This, Harwood noted, does not represent all the company's available cash, but rather that which it could readily make available.

Some analysts attending the conference questioned the timing of the acquisition, as the credit market is currently down, as is the level of enthusiasm for RFID technology. In addition, several deemed the sales price for the acquisition a disappointment. One analyst argued that with $18 million in available cash and existing real estate values in Irvine, Calif., where Printronix has its headquarters, the price tag is dissatisfying low for shareholders. Analysts also expressed dismay that Printronix would sell to a private firm at a time when enthusiasm for RFID technology had reached what Kleist called a plateau. These experts queried whether the committee had considered a management change as an alternate option—a practice common for companies with declining profits. Kleist indicated that he did not know such details.

"This was a rigorous process we went through over a protracted period of time," Harwood told conference attendees. He and Kleist said results from the second quarter of 2007 were not yet available but would be prior to closing. Printronix reported $128.4 million in revenue for the 2006 fiscal year.

Kleist, who is also the public company's largest shareholder, said he will continue his own position at the helm, and that Printronix will continue its product line as it had before. "As a private corporation, Printronix will remain committed to its customers," he stated, indicating he will retain 9.9 percent collective ownership of the firm with other senior executives.

According to Kleist, Vector and Printronix arrived at the details of the acquisition through negotiation. "This was not the only opportunity we looked at," Kleist said. Still, he added, "We thought it was the best one." Vector Capital will pay for the acquisition with its own equity, as well as financing from an unnamed bank. The details will be filed with the Securities and Exchange Commission (SEC) in about two weeks, Kleist says, and will be available at the SEC Web site.

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