Amazon to record $100m profit in Kornit secondary offering

Ronen Samuel CEO Kornit Digital Photo: Kfir Ziv

The Israeli digital textile printing company is taking advantage of its high share price for a secondary offering with shareholder Amazon a major beneficiary.

The share price of Kornit Digital (Nasdaq: KRNT) may have fallen back from its peak in early November, but the Israeli digital textile printing company is taking advantage of its high trading levels for a secondary offering, with its shareholder Amazon a major beneficiary.

Kornit plans raising $240 million (according to yesterday's share price), and an extra $53 million if the underwriters exercise their options to buy 331,000 additional shares within 30 days.

Kornit's share price fell 8.41% to $146.76 on Wall Street yesterday, giving a market cap of $6.792 billion, having previously risen 80% since the start of the year.

Kornit intends to use the proceeds from the offering for future potential acquisitions, including complementary businesses, technologies or assets, and for general corporate purposes, including working capital and capital expenditures.

Citigroup, Barclays, Goldman Sachs & Co. LLC and Morgan Stanley are acting as bookrunners and as representatives of the underwriters for this offering. Needham & Company, Stifel, William Blair, Berenberg, CJS Securities and Craig-Hallum are acting as co-managers.

The secondary offering also includes an offer to sale by existing shareholder Amazon, which will make a huge profit on its stake in Kornit. At the start of trading yesterday, the shares that Amazon is selling will yield it a profit of $104 million, after selling Kornit shares last year at a profit of $73 million.

Amazon will sell 706,000 shares, over half its current stake in Kornit, for $113 million, and will remain with a 1.2% stake in the company. Amazon assumed its position in Kornit in 2017 through a strategic cooperation agreement, which was linked to its expenditure on Kornit's products.

Amazon received an option to buy 2.9 million shares at $13.04 per share - after yesterday's fall the share is worth $146.76. Last year Kornit and Amazon signed a new agreement in which Kornit would allocate options to Amazon for up to 7% of the company's shares in full dilution, subject to a $400 million investment by Amazon in Kornit's solutions over five years, including $150 million in new production lines.

Kornit held its Nasdaq IPO in April 2015, when it raised $71 million at $10 per share at a company valuation of $288 million. Since then it has made several secondary offering in which existing shareholders have made an offer to purchase.

In the third quarter of 2021, Kornit last week reported revenue of $86.7 million, up 51% from the corresponding quarter of 2020. Non-GAAP net profit was $11.5 million or $0.24 per share.

Kornit CEO Ronen Samuel said, "We are witnessing the change in the fashion industry with an acceleration to sustainable, on-demand production - a revolutionary moment in how we all think and act about fashion, from the need for self-expression, to responsible production. Kornit is leading the digital transformation the fashion industry must make with innovative solutions that break the barriers between imagination and physical applications."

He added, "We enter 2022 with very strong business fundamentals supported by broad-based demand for our industry leading solutions. This growing demand and market acceptance puts us firmly on the path of becoming a $1 billion revenue company in 2026."

Published by Globes, Israel business news - en.globes.co.il - on November 18, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Ronen Samuel CEO Kornit Digital Photo: Kfir Ziv
Ronen Samuel CEO Kornit Digital Photo: Kfir Ziv
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