Danaher Will Buy X-Rite

Bob Leahey
Apr 25, 2012

Danaher Corporation, an industrial and healthcare manufacturing conglomerate, made news again this month for another purchase that is important to the color digital printing world. This came when Danaher announced that it will buy X-Rite Inc., which makes color measurement systems. X-Rite also is the parent of Pantone, the formulator of color standards for print service providers, including converters of labels and packaging for consumer products. Danaher’s offer values X-Rite at $5.55 a share, or about $479 million. This is a 39% premium over X-Rite’s closing share price of $4.00 on April 9, 2012, which was the last trading day prior to the announcement. Stockholders representing approximately 68% of the voting power of X-Rite’s outstanding shares reportedly intend to tender their shares into the offer. The deal is subject to regulatory approval and closing conditions, but is expected to close by July 1, 2012. Observers of the CDLP market will remember that Danaher made a similarly important purchase in 2011, with the acquisition of Esko.
For its 2012 investment, Danaher will net a company that is highly influential in the packaging and label industries. X-Rite’s spectrophotometers, colorimeters, densitometers, and related products are widely used by converters and other print service providers to test color reproduction, a vital topic in the representation of consumer brands. At the same time, X-Rite’s Pantone business is one of world’s top sources of color standards. The Pantone Matching System (PMS) colors are commonly the choice of brand owners worldwide. PMS colors may be less influential in other regions than they are in North America, but many global brands often have a high reliance on them. One sign of their importance is that, among color digital label and packaging (CDLP) press manufacturers, it is common for an individual vendor to describe a new press’s color printing capability by estimating the percentage of PMS colors that the press can reproduce.
Danaher’s 2011 purchase of Esko, which was then called Esko Artwork, was a somewhat smaller investment, $470 million. Danaher closed that deal at the middle of 2011, and thus added to its portfolio one of the top suppliers of design and workflow software for the packaging and label converting industry. Esko became part of Danaher’s “Product Identification” group, whose anchor member is Videojet Technologies (Wood Dale, IL), the leading vendor globally for monochrome inkjet coding systems. While there is no obvious synergy between Esko and Videojet, Esko has continued to thrive as an independent company within the group. Assuming the newest Danaher purchase goes through, the conglomerate’s Product Identification group will soon have Esko, X-Rite, and Pantone within it, and there will be synergy between their various products and services.
One further note about Pantone is that this X-Rite subsidiary is in the process of launching a cloud-based version of its PMS colors called “PantoneLIVE.” The hard copy PMS swatch books that are found everywhere among brand owners, designers, and print service providers will soon have an electronic option that will make life simpler and more reliable for the converter and the brand owner. This will happen because prepress and production staff, as well as brand managers and designers, will all access a central database of color definitions over the web. In turn, converters will achieve higher color accuracy, regardless of the substrate, ink, or production method that is used.
Having Esko and Pantone under single ownership can provide new opportunities in terms of product development, innovation, and go-to-market. From an innovation perspective, Esko can help bring Pantone more to the digital printing world. From a marketing perspective, Esko can leverage its partnerships to expand Pantone’s presence in additional channels. For instance, the Esko Color Engine–a fundamental component in Esko’s raster image processor (RIP) and workflow products–has been expanded with PantoneLIVE support and is licensed to GMG to give them PantoneLIVE capability in their proofing products.
Esko appears to have thrived as a Danaher company, which bodes well for X-Rite going forward. Danaher, which owns a few companies besides Videojet that make product identification and coding devices, appears to be a benign parent and one that will support development of a new strategic segment, if the right deals are available. EskoArtwork was a new starting point for Danaher in the printing industry. In buying X-Rite, Danaher is again buying a market leader in one facet of printing. Given Danaher’s resources and its young but established focus on full color printing, InfoTrends expects Danaher will make related purchases over time.

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