Is E Ink, which makes display technology vital to the Kindle, selling out for too little? The company announced a deal earlier this month to sell itself for $215 million to Taiwan-based Prime View International, but investors are reportedly now up in arms over the agreement, and it could be in jeopardy. Shareholders still need to vote on it and The Boston Globe reported over the week-end that “some of E Ink’s biggest investors are now said to be resisting” because they want a higher price and think that, on its own, E Ink could be headed for an IPO. Tech blog Xconomy also cites a source as saying that the deal is unlikely to be approved when it’s eventually voted on.
It turns out, according to the Globe‘s report, that PVI’s $215 million offer was not new but rather was related to a financing agreement that E Ink reached with the company last summer. The agreement also gave PVI the right to make a bid for the company, the paper says. At the time, according to the Globe, the company was projected to bring in $80 million in sales this year, but E Ink now expects sales of $110 million — which would make the $215 million price tag very low. As E Ink says in its own press release announcing the deal, the “ePaper display module market” is expected to grow to over $3 billion by 2013. E Ink is the biggest supplier of the materials used in the vast majority of those displays. Investors are also not getting a very big return, considering that they have put about $170 million into E Ink over the last 12 years.
Xconomy also says that some strategic E Ink shareholders, including Hearst, are worried that PVI would now have too much power over their own e-reader plans. Hearst is expected to release its own e-reader some time this year. E Ink CEO Russ Wilcox, meanwhile, insists that the deal is moving forward, telling the Globe that “because of our growth, there is a need for financing, and PVI will inject resources into this business.” A PVI official also tells the paper that the majority of investors had agreed to the deal before it was announced.