Manufacturing Ink for Digital Print: EFI’s Acquisition of Rialco

Ron Gilboa
Mar 7, 2016

On March 2nd, EFI has acquired Rialco Limited, a UK-based supplier of dye powders and color products for digital print and industrial manufacturing industries. The acquisition is an important one for EFI because it could augment EFI’s equipment offerings with complementary EFI OEM inks for their digital textile printing products.

Based in Bradford (an hour’s drive northeast of Manchester), Rialco manufactures inks and dyes for textiles and wood finishing applications. Rialco was incorporated in 2003 and its latest turnover is just about 7.9 GBP (or just over $11 million) and gross profits of about 2.1 GBP (or just under $3 million) for 2014 (according to DueDil.com). According to EFI the company will operate as part of EFI’s industrial inkjet business, and will continue to support its existing clients as well as expand and grow its capabilities with new products and new customers as part of its long term growth strategy. As noted by Stephen Emery, Vice President of EFI’s Ink and Jetrion businesses, “The deal announced today gives EFI the platform to accelerate the technical advantages we provide to customers in the textile, signage, ceramics and other industries that are rapidly transitioning from analog to digital printing.”

EFI has been strategically adding print capabilities to its portfolio in graphic arts and industrial print segments with several acquisitions including VUTEk in 2005, Jetrion in 2006, Cretaprint in 2012, and Reggiani in 2015. In 2014 they also acquired technology from Polymeric Imaging to help them accelerate their ink development capability. These strategic acquisitions helped EFI expand its business focus beyond digital front ends and Print MIS software. This growth strategy was aimed at adding business elements that provided not only equipment revenue, but also recurring revenues from supplies. To date EFI has made investments to support ink manufacturing for all its products including the UV curable inks for the VUTEk product line, inks for ceramic tile decoration for the Cretaprint product line, and now, with the acquisition of Rialco, a range of inks that can be leveraged for its emerging textile business.

Ink manufacturing for digitally printed textiles is a small but growing market, which amounted to just under $300 million in 2015 and is expected to grow at a rate of over 30% CAGR to reach about a billion dollars by 2019 according to InfoTrends Digital Textile Forecast. The Rialco acquisition enables EFI to develop its own brand of ink for textile printing for graphic arts applications like soft signage, where the primary focus will be on sublimation inks. It will also expand EFI’s ink capabilities for fabric manufacturing via reactive, acid, and disperse inks. This is a logical development given EFI’s acquisition of Reggiani. At the time of the Reggiani announcement EFI noted that 40% of Reggiani’s customers were using OEM inks. This acquisition will help EFI increase the use of its own inks while also providing inks that can be used for soft signage produced on EFI Reggiani devices.

The textile market is distinctly different from the sign and display market. In the textile market, users expect a choice of inks from either the system vendor or an approved third-party. Over the years a range of textile ink manufacturers have produced and qualified inks that work with a range of print heads and systems. Unlike other inkjet markets, all of this has occurred with the blessing of the equipment manufacturers (who have tended to be smaller companies without ink manufacturing capability). These inks provided by these third-party sources may have certain advantages such as saturation, light fastness, and fabric hand (feel). A shift to an OEM ink model could occur in the textile market if the vendors can provide inks that are superior and/or more cost effective compared to third-party inks. In sign and display markets, most units sold are supplied with a multi-year ink contract and a quality guarantee that stipulates the use of OEM inks. Third-party inks are available but are not as common as in the textile market.

There is evidence of the trend toward OEM inks in textile printing in recent news:

  • Konica Minolta-branded inks are available for the recently announced Nassanger SP-1 product
  • SPG Prints added a Pike printing system to their product portfolio anchored around their branded inks
  • Dover, which owns MS S.R.L, acquired JK Group a holding company with assets in sublimation and pigment inks that is comprised of the assets of Kiian Digital, J-Teck3 and Sawgrass Industrial leading textile ink manufacturers.

InfoTrends Opinion

EFI is executing on its long-term strategy. The company closed 2015 at over $880 million in revenue and expects to reach the $1 billion mark in 2016. Achieving this will require additional growth in strategic markets, such as textiles, which they have just entered, but also markets like packaging for applications like folding carton and flexible packaging, where the company has not been active. Rialco, the latest move in EFI’s ongoing merger & acquisition strategy, allows the company to expand its integrated solutions in the growing textile market. We are likely to hear additioanl details while at FESPA 2016 and during the time leading to drupa 2016.

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