Digital printer giant Xerox Inc. (NYSE:XRX) is making its first investment in Israel. Sources inform ''Globes'' that that Xerox is about to acquire Israeli start-up XMPie Ltd. for $40-50 million. XMPie develops solutions for customizing digital printing and electronic media.
Xerox has a market cap of $13 billion, and posted a net profit of $865 million on $16 billion revenue in 2005. Its main competitors in the digital printer business are Hewlett Packard Co. (NYSE:HPQ) and Canon Inc. (NYSE:CAJ; TSE:7751).
Xerox is acquiring XMPie after a long period of cooperation between the two companies. XMPie was founded as a digital printing spin off of Scitex (now Scailex Corp. ltd. (Nasdaq: SCIX; TASE: SCIX) since its sale to HP) in 2000. In late 2002, the company signed its first distribution agreement with Xerox for the distribution of its products in Japan through Fuji Xerox Co. Ltd. A few months later, the agreement was extended to North America through Xerox USA.
XMPie develops variable data publishing (VPD) products, offering a complete platform for printing, data control, interface, document design, data access and data retrieval, the transfer of data between different electronic media (printing, Internet, e-mail, and cellular messaging), and e-commerce.
XMPie’s technology is mostly used for advertising sheets and customized advertising through the company’s PersonalEffect solution. The company’s products can collate information about customers from enterprise customer relation management (CRM) systems, and customize advertising material and newsletters sent to them.
XMPie distributes its products through partners, including Xerox, HP, Electronics for Imaging Inc. (Nasdaq: EFII), Sakata Inx Corp. (TSE:4633) of Japan, Creo (now part of the Kodak Graphic Communications Group), and Israeli start-up Press-sense Ltd., which also closely cooperates with Xerox.
XMPie was founded by chairman and CTO Jacob Aizikowitz, chief software architect Israel Roth, and EVP R&D Reuven J. Sherwin, all former Scitex managers. Scitex not only was the source of XMPie’s human capital, but also supplied its starting capital with a $500,000 investment. Jerusalem Venture Partners (JVP) later became the company’s largest shareholder after investing $13 million in several financing rounds.
In 2002, XMPie acquired some of the activities of Nuvisio as part of a deal with US microinvesting company BabyMint. In early 2005, Eyal S. Goldwerger was appointed CEO. The company currently has 40 employees at its New York headquarters and Netanya development center. The company raised $15 million from JVP, Scitex and, last year, from Carmel Ventures fund Plenus Venture Lending Fund.
As mentioned above, XMPie is Xerox’s first acquisition in Israel. Xerox Israel Ltd., under general manager Yoram Levanon, is a sales and services subsidiary. Xerox Israel has 95 employees, and the company has installed 70 XMPie systems in Israel under its partnership with Xerox.
The acquisition of XMPie is a successful exit for JVP, giving it a three-fold return on its investment. It is not a fantastic exit, however, of the kind seen in other deals.
XMPie was not available for comment. JVP declined to comment. Yoram Levanon said, “I am very pleased at Xerox’s decision to invest in Israel.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 5, 2006
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