From: How the cruel stock market is killing Israel high tech legend: an insight view of a long-term Scitex share holder.

Shlomi Cohen 12/24/1999 14:55


How the cruel stock market is killing Israel high tech legend: an insight view of a long-term Scitex share holder.



My heart with Scitex managers that six months ago invited me, along with leading analysts from all over the world, to 10 hours of presentations on Scitex state of the art technologies and shining future.


From all that I heard during that day, I now recall what Itai Halevy, Corporate Vice President, said when I asked him to react on the endless rumors about Scitex being a target for a long-expected takeover. Itai said: “We, the managers of Scitex, still believe that we can make Scitex the Israeli NOKIA,” he honestly replied.


My heart with Itai and the other outstanding managers that presented Scitex to the analysts at that day and are now watching how the new Chairman, Rimon Ben Shaul, is slashing Scitex to pieces. This brings back another memory, of Efi Arazi, Scitex founder, who once described what Davidi Gilo (founder of DSP and DSPG) was planning to do to Scitex: “slash it and sell its pieces the same as spare parts are sold in Gaza marketplace”. To those of you who do not remember – Efi was commenting on Davidi’s takeover proposal way back in April 1996. A takeover that was never concluded because Scitex’ leading share holders, Clal and DIC, declined Davidi’s offer for up to $25 a share.


Soon Scitex will be sold in parts as a victim of the cruel stock market. In days when a company like Sensar (SCII) is evaluated at $400m just because they appointed David Rubner from ECI as a Chairman (no sales yet), Scitex with more than $700m in annual sales , is not getting a much higher evaluation in this sky rocketing market.



Let me try to guess in the following lines how Scitex owners are planning to maximize the value of the parts:


The Digital Pre-Print will go to Creo (CREO) for $500m against Creo stocks that later will find their way directly to Scitex shareholders. By selling to Creo, Scitex employees will find themselves working for a longtime competitor, Heilderberg from Germany, who partnered with Creo.


Karat unit, with its 74 Karat-Digital Offset Press will go to the 50% partner KBA from Germany. I guess that KBA more than unhappy to see the link between Scitex and their biggest competitor, Heilderberg.


From the existing Digital Pre-Print Division, my guess is that Iris Proofers will be taken out of the deal with Creo. This unit will probably be sold to other proofer manufacturers, like Imation (IMN) once part of 3M (MMM).


Scitex Digital Printing (SDP) from Dayton Ohio, will finally be sold to Xerox. Xerox, with a series of warnings lately, needs this business (and especially the VersaMark Book Printer) in order to place more new products in the market.



Xerox will also buy the small unit (located in Israel) that on an exclusive contract with Xerox, develops and manufactures the DFE – Digital Front End. Scitex DFE will help Xerox with their next generation high end color digital printer, that is planned to be launched next year and is supposes to bring Xerox back to a growth route.


As already has been discussed in the press, the Wide Format Printing will be merged with Nur Macroprinters Ltd. (NURM), an Israeli-based successful competitor.


VIO, the Scitex and British Telecom Joint Venture will find it ways to the benefit of Scitex shareholders to an Internet IPO sooner or later as VIO.COM….


What is yet left to be seen is whether this auction will bring us, Scitex shareholders, the same price of $25 that Davidi Gilo offered four years ago