HP acquires Indigo in $882m deal

Hewlett Packard, hot on the heels of its $20bn bid for Compaq, is to pay up to $882m in a stock and cash deal to acquire printing systems company lndigo.

HP confirmed it already owns 13.4 per cent of Netherlands-based Indigo.

Under the terms of the agreement, HP will acquire the remaining shares for approximately $629m in HP common stock, with an additional cash payment of up to $253m, contingent on Indigo achieving its revenue targets.

Carly Fiorina, HP's chief executive, said the two companies have a proven track record of collaboration.

"Indigo extends HP's printing systems portfolio beyond inkjet and LaserJet technology into a third high-speed colour print technology."

Indigo, a $200m concern, has 1100 employees. After completion of the acquisition, Indigo will operate as a new division of HP's Imaging and Printing Systems business.

Benny Landa, Indigo founder and chief executive, said: "Our vision has been to lead the printing industry into the digital era, and now as part of HP that goal is in sight."

Vyomesh Joshi, president of HP's Imaging and Printing Systems, pointed out that by linking Indigo's digital press to higher-value pages, HP expects to grow its commercial printing division over time into a multi-billion-dollar HP business.

Then again, analysts have been anxious about HP's overall printer strategy. A report by Merrill Lynch analyst Tom Kraemer noted that weaknesses in today's printer market mean HP's printer revenue could be hit in the future.

And Gartner analyst James Lundy said HP's recent foray into the high-end, high-speed printing market might leave some people questioning the company's commitment.

"If HP's service and standards fall short," he said, "it could give the company a public relations black eye."