Gerber Acquired by Vector Capital Corp. in Merger

Stock price rises sharply after deal is announced.
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Gerber Scientific Inc. (Tolland, CT), the parent company of Gerber Scientific Products, announced a June 13 merger agreement with Vector Capital Corp. (San Francisco, CA). As a part of the agreement, funds affiliated with Vector will acquire the company, the announcement states.
Gerber operates Gerber Scientific Products as well as Spandex and Gerber Technology, supplying equipment for signmaking, specialty graphics, packaging, apparel and industrial industries. On June 13, the company announced its board had unanimously adopted the merger agreement.
The agreement is the latest in a series of changes within Gerber aimed at “rationalizing our facilities, reducing supply chain costs, and streamlining our organizational structure and headcount,” President and CEO Marc Giles said in an August 2010 fiscal-earnings conference call.
Earlier that year, in June, the company consolidated Massachusetts-based Gerber Innovations and moved the plant to existing facilities in Tolland, CT. At the close of 2010, Gerber sold its ophthalmic, lens-processing unit, using proceeds to pay outstanding debts. Last April, Gerber exited the flatbed-printer business to focus on its more-profitable, thermal-printing products.
Gerber has also undergone leadership changes. The company’s former president, John Hancock, was replaced by Giles at the end of April.
Calls to Gerber Scientific to determine the plans for servicing existing Gerber machines were not immediately returned. The company’s involvement in litigation regarding a computerized “print to cut” technology patent is also unresolved, though shareholders may receive contingent cash payments in the future if recoveries are made from this litigation.
Gerber’s board of directors will actively solicit alternative proposals through July 25, 2011. Without a superior offer, the deal is expected to close in the second half of 2011.
Vector Capital is a private-equity firm that specializes in spinouts, buyouts and recapitalizations in the technology sector. The firm has committed debt financing from Fortress Credit Corp., though this was not a condition of the merger agreement.
A number of shareholder-investigation law firms, including Harwood Feffer LLP, Levi & Korsinsky LLP and Bernstein Liebhard LLP, have announced investigations against Gerber’s board. In a written release, Harwood Feffer lawyers explained, “Our investigation concerns whether the board of directors has undertaken a fair process to obtain fair consideration for all shareholders of Gerber.”
 

Signs of the Times January 2021

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