As previewed on our blog yesterday by an Anonymous poster, Kofax has sold its hardware business. The price is listed at $23.2 million, which seems startling low what was reported as a $126.6 million business for Kofax’s fiscal 2010 (ended June 30). Of course, the EBITDA was only $1.8 million, for a 1.4% margin, down from $8.8 million the previous year.
We all knew Kofax wanted to sell this hardware distribution business, which operates primarily in Europe, for some time. For a couple years, Reynolds Bish cited it as a profitable entity that helped contribute to Kofax’s bottom line, but those tight margins last year, were likely the tipping point that made Kofax finally go ahead with the sale.
I guess the Anonymous poster already pointed out the irony in the fact that Dicom, which was basically the distribution business, bought Kofax in 1999. A couple year’s ago, the entity’s name was changed to Kofax, and now Kofax is selling off the former Dicom business, which is going to be renamed Dicom.
According to the press release, “Joachim Froning, Senior Vice President of Hardware Distribution Sales at Kofax and the anticipated Chief Executive Officer of Dicom International AG.” The deal was mainly financed by Hannover Finanz, “a private equity firm headquartered in Germany.” We wish the new owners the best of luck and hope they will be able to reverse the trend of declining profits.
There was also this interesting quote in the press release (from Kofax CEO Reynold Bish): “The proceeds from this transaction and the planned restructuring will better position us to focus on and further grow our software business revenues and earnings both organically and via our acquisition strategy. This is particularly timely as we recently concluded a successful half year that is materially better than the expectations previously conveyed in our Interim Management Statement dated November 4, 2010. We look forward to announcing these results on February 7.”
As of this posting, Kofax’s stock shot up almost 5% following this morning’s (London time) announcement of the deal. I guess for Kofax this equals addition by subtraction.