Presstek to be acquired by private equity firm
Presstek Inc. is being acquired by an affiliate of private equity firm American Industrial Partners for 50 cents a share, the two companies announced Thursday.
What AIP will do with the struggling Connecticut-based printing equipment manufacturer — whose major production facility is in Hudson, N.H. — is not yet known. AIP already owns Mark Andy Inc., a Missouri firm that manufactures presses to make labels and packaging. Presstek's presses are mostly used for mailings and small publications, but there will be some overlap.
"They are sister companies, and there will be some synergies with resources and technologies," said Ben DeRosa, a partner in the New York-based equity firm. "We really value the technology at both companies and want to create a stronger business. Operational improvement is what we do," he said.
DeRosa would not comment on whether there will be any consolidation of the facilities or in the workforces."We have no specific plans regarding head count," he said.
"As far as I believe, we will still be here," said Brian Wolfenden, director of marketing communications for Presstek. "We will continue on as normal."
The deal, which is expected to close at the end of the year, still needs to be approved by stockholders, but AIP — or rather MAI Holdings Inc., an entity affiliated with American Industrial Partners Capital Fund IV, L.P. — said it has already obtained the agreement of Presstek's largest shareholder, IAT Reinsurance Company Ltd., which owns 24.5 percent of Presstek's outstanding comment stock.
The release did not disclose the full value of the transaction, but as of June 30 — according to Presstek's latest financial filing — the company had 37.4 million shares of outstanding stock, which would peg the sale price at about $18.7 million.
Less than three hours after the merger announcement, The Briscoe Law Firm PLLC and Powers Taylor LLP announced they were seeking plaintiffs for a possible class action lawsuit against the merger.
The law firms point to one analyst that estimated that Presstek's true value was $3 a share.
"Due to the lack of a significant premium to the shareholders and other factors, we believe that the transaction may undervalue Presstek stock," said Willie Briscoe, whose law firm is based in Dallas, Texas.
Such announcements are common after merger announcements.
AIP stressed that the Presstek selling price was 16.3 percent over Wednesday's closing per-share price on Wednesday, which was 43 cents. (It closed Thursday at 49 cents, close to the announced sale price.)That's a far cry from $1.50 per share the company's stock was selling for almost a year ago. However, the stock price has tumbled since then, as it tried to stay afloat despite the economic slowdown in general and the printing industry's slump in particular.
In the last three full years, Presstek posted net income totaling more than $70 million, despite the company cutting its worldwide workforce to 384 at the end of 2011 — almost a third of what it was five years earlier. At midyear in 2012, the company lessened its cash burn, but still posted year-to-date loss of $3.2 million. As the stock price fell to a low of 36 cents a share at the beginning of the month, the Nasdaq threatened to delist the company for not keeping its share price at more than a dollar per share.
Presstek, after failing to meet Nasdaq's April deadline, transferred its stock listing to the Nasdaq Capital Market and asked for — and won — shareholder approval for a reverse split, as much as 15 for one, in an attempt to boost up the company's share price. But the company never implemented the split.
AIP – which started in 1989 — has completed some 30 transactions and is currently managing more than $1.1 billion in capital. Its website stresses that the company specializes in industrial companies and "supports talented management teams in building their business. We do not play a role in the daily operations of portfolio companies, but rather form a true partnership with management to drive growth."
AIP acquired Mark Andy in 2008. The St. Louis-based printer has an installed base of 500 machines worth more than $1 billion, according to the firm.
AIP's other current investments include Heil Trailer International, Micro-Poise, Northeast Hardwoods and Allied Specialty vehicles.
According to one newspaper report, there was a wave of layoffs after AIP acquired fire truck manufacturer E-One in Ocala, Fla., in August 2008. AIP then merged E-One with three others truck manufacturers, forming Allied Specialties Vehicles Inc., with revenue of about $1 billion.
DeRosa acknowledged that the headcount was down at the former E-One facility without revealing numbers, but said that was a reflection of the state of the emergency vehicle industry as a whole. He said, however, that the Florida facility is still operating and is a "vastly improved market-leading profitable business … that is where we make all our fire trucks."